Ten Tips on Renting Out Your House - The Wall Street Journal 09-03-2009

Ten Tips on Renting Out Your House
The Wall Street Journal
September 3, 2009

With housing prices still in the dumps, many Americans are finding themselves in the uncomfortable position of landlord. Some have been forced to relocate for a job and can't sell their houses. Others have moved, but are holding on to their previous homes, hoping for prices to rebound before selling. Many are finding that rent checks don't come close to covering their mortgage payments....

Ten Tips on Renting Out Your House:

Check with your co-op, condo or homeowners' association about rules regarding renting out a unit.

If you want to refinance the mortgage, do so before letting out the house, as not occupying the home may adversely affect your ability to do so.

Research the market; and get a sense of vacancies and comparable rents in your area. Check with local real-estate agents or go to a Web site like Rentometer.com.

Calculate your monthly expenses including mortgage payment, property taxes, insurance, etc., and see if you can charge enough rent to cover them, but remember expenses like repairs and maintenance are deductible against income.Consult IRS Tax Topic 414 at www.irs.gov and IRS Publication 527 for tax laws regulating rental income and deductions.

Draft or obtain a residential lease agreement and stipulate your requirements for rent, security deposit, upkeep and rules; standard forms are available online from various sources, including Nolo.com.

Check with state and local authorities for landlord-tenant and fair housing laws. Landlords generally are required to keep homes habitable and well-maintained and meet local codes, to disclose lead paint and, often, to maintain working smoke detectors.

Do a thorough background and credit check on tenants, call references.

Decide whether you will do maintenance yourself if you need a property manager, they charge 3% to 12% of monthly rent.

Check with your insurance agent about converting to a rental housing policy for an average of $500 to $2,500 annually.Sources: NOLO, USAA, AICPA and WSJ research.