How We Turned Our Home Into a Rental
We recently moved from Phoenix to Kansas City and decided to rent our home. Renting it went with our long-term goals, we’d like to own a few rentals for the appreciation and long-term benefits. Here are the exact steps we took –
1. We figured out how much to charge.
Current Mortgage = $1450/mo
Yard maintenance = $150/mo
Pool maintenance = $75/mo
Total = $1775/mo
Zillow said the going rate was $1750/mo so I was a little worried, but our house is clean, has a pool, washer/dryer, new carpet and a great layout and location. We decided to try $1950/mo to see what happened.
Note: We didn’t want to compromise on the pool and lawn care because you never know if your renters will take care of it, even if they say they will. It takes less money to maintain than it does to fix either the pool or yard.
Other fees –
Pet fee $100
Non-refundable cleaning fee $300
Security deposit $1950 (one months rent)
2. I took pictures of the house and listed it online.
We listed on Zillow and Trulia (they go together) – it’s free. In the listing, I included some details you may not think of. We have an organic yard – citrus, tons of trees and many upgrades that are eco-friendly. I included this information in the ad and it’s what our renters were excited about!
3. I talked to our CPA about our plan.
He needed to know the current value of the home, original cost, improvements and the cost of the land. While you don’t have to do this at the time of renting, it made tax time easier.
4. I contacted a lawyer to draw up a deed.
I had an LLC already open and had a deed drawn up to move the house out of my name and into the name of the LLC.
We filed the paperwork ourselves by mailing it to the County Assessors office, but you can have the title company do it for you. It was $35 to do it ourselves. (If you don’t have an LLC, you can create one.)
5. We found renters and did a credit and background check
I used a website to do a background and credit check – mysmartmove.com. It’s owned by Transunion, one of the credit companies.
This way, I didn’t have people’s personal information and the website told me if they were safe to rent to or not. The potential renters also paid the online fee, and we didn’t have to mess with paper applications.
6. Renters signed the lease and returned it with all the fees.
(The name of the LLC is the lessee on the lease.)
7. I set up online bookkeeping and a bank account.
I like to make my taxes as easy as possible and subscribing to an online bookkeeping service saves a ton of time.
8. We obtained landlord insurance.
We cancelled our homeowners insurance (for the day we moved out) and replaced it with Landlord policy. It was $750/yr, about 40% cheaper than our homeowners policy.
9. We did maintenance on the house.
Tested the fire alarms, changed the filters in the r/o system, had more keys made and did general maintenance on the house.
Many of the things we did are optional and what personally worked for us. I hope this information helps you rent your home, or decide if it’s right for you. Please contact me if you’d like more information.