Tips on Renting Out Your House to Tenants

If you're looking for tips on renting out your house, you've come to the right place. Is renting out your house a good idea? Probably. There are plenty of valid reasons to rent out a house. Some homeowners decide to rent houses because they don't need to sell in order to buy another. Others want an investment, and renting out the house might have been their plan when they bought the house. Still, other homeowners might be forced to rent out a house because they must move and cannot yet sell.

Maybe these homeowners were transferred by an employer and realized they can't sell their house because the market is not conducive to home selling. For example, sellers of underwater homes might prefer not to do a short sale and may elect to try to ride out the market by renting out their home. Whatever the reason for renting out a house, not every seller knows how to do it.

When I bought another home in the early 1990s, I rented out my existing house. I had bought a home for $100 down and assumed an existing mortgage. The loan assumption costs were so low that I could keep my existing house instead of selling it.

Probably the biggest mistake I made was not running a credit report on the prospective tenants. I gave them a rental application and told them I would run a credit report. I warned that if they had any derogatory credit perhaps they should explain those credit dings to me in advance.

In theory, that practice should work. Tenants would tell me about a late payment they made 5 years ago to Sears. Maybe I didn't need an actual credit report? But tenants also can lie. Therefore, I do not recommend that approach.

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