Comply with the Law
As you become a Sole Proprietorship the moment you start offering rental space, you need to ensure you comply with local laws regarding property rental. These vary by state, but, at minimum, you need to familiarize yourself with the duties required of a landlord by law, tenant rights and obligations and the way you should handle their safety deposits. Some states may also require you to obtain licenses or file for permits.
It almost goes without saying that you should also ensure your property is in good, habitable shape. That means completing any and all inspections that may be required, ensuring that the property is heated, in good repair, receives water, gas, and electricity, and can be locked properly. The rule of thumb is that if you'd be comfortable living in the rental unit yourself, it can probably be considered habitable. In short, a crucial aspect of how to rent out a house is knowing how to keep it in good shape.
Prepare the Paperwork
Before you put up the first advertisements, there's a fair amount of work to be done. First, you need to figure out how much to ask in rent and decide on whether you're interested in short term rentals or a long term Lease. The former provides you and the tenant with flexibility, while the latter will offer long term security at the expense of being able to change tenants easily.
Regardless of the choice you make, you will likely have to set up a separate bank account to handle financial affairs related to the rental. Since most states require you to set up a separate escrow account for the safety deposits, this should be a simple matter. You should also prepare all the paperwork you will use as a landlord, most importantly the Rental Agreement.
Mind the Details
Paperwork is the core element of figuring out how to rent out a house. The Rental Agreement should precisely regulate what you are renting, who the tenants are, what their obligations are (such as not disturbing the peace), policies on pets, precise information on how high the rent is, how it should be paid and when, and so on and so forth. An exhaustive Rental Agreement is also your best line of defense when it comes to disputes over the way the property is used.
Remember Your Duties
As a landlord, your job is not just to collect money. You have a responsibility toward your tenants to ensure the property remains habitable and all damages that may affect this status (such as damage to electrical wiring, plumbing, or septic system) are repaired in a timely manner. If they are not, the tenants may have a right to withhold rent from you until you fix the problems. Common areas (corridors, the courtyard, etc.) are also generally covered by this obligation. However, damage caused by tenants is usually not covered by this obligation. If tenants damage the property, they risk of losing part or all of their deposit.
Finally, remember to keep meticulously detailed books, and keep track of every expense and payment. Remember, unless you form a corporation or LLC, you will be reporting the income to theIRSon your own forms, meaning accuracy and attention to detail are mandatory to avoid poor engagements with the agency.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
