Nine Steps to Turn Your Home into a Rental Property

Appfolio Websites • January 21, 2021

source:  Aparments.com / Jamia Kenan (author)


Many first-time landlords begin their careers in the real estate industry by transforming their homes into rental property. Perhaps you’re looking for an avenue to build wealth or you’re moving but not quite ready to let go of your abode. Whatever the reason, it’s important to know that there are some things you need to do before converting your primary residence into a rental property. Here are some steps to help you turn your home into a rental. 

1. Weigh the Pros and Cons 

Turning your home into a rental property is a big commitment. Realistically evaluate if owning rental property is something you can handle at the moment. Here are a few advantages and disadvantages to renting out your house. 

Pros

  • Owning rental property is a great way to build wealth and diversify or supplement your income 
  • The income you receive can help pay down your mortgage while also providing extra cash flow 
  • If your home has been on the market for a long time and you haven’t received an offer that allows you to break even, you can postpone selling the house 
  • Renting is a great option if you inherited a property, but don’t want to sell it or live there 
  • You could qualify for some tax deductions if you turn your home into a rental 

Cons

  • If you decide to manage the rental yourself, it can be very time consuming 
  • You’ll have to handle rental property expenses including real estate attorney fees, routine maintenance, landlord’s insurance, and more 
  • Since markets fluctuate, your rental property might produce less rental income than expected 
  • There are some risks like theft and vandalism if your rental stays vacant for too long 

2. Consider Waiting If You Have a Mortgage 

If you have a mortgage on your home, you generally need to live in the house for at least 12 months before converting the property into a rental. Read the contract for your loan and/or reach out to your lender to determine the waiting rules that apply to your loan. You don’t want to be accused of mortgage fraud, so it’s important to find out what rules are in place. 

If you say you’ll live in the home but are actually purchasing it as an investment property, it’s considered mortgage fraud. If a lender discovers a property owner has committed fraud, they could call the loan in which will likely lead to foreclosure. Once you’ve lived in the house for the required timeframe for your mortgage, you can begin turning your primary residence into a rental property. 

Although you might be eager to own rental property, owning a primary residence and converting it later has its advantages. Generally, homeowners can have a smaller down payment and lower interest rate when the mortgage loan is for a primary residence while rates for an investment property or vacation home might be higher. 

3. Find Out Whether You Can Get Another Mortgage 

If you’re moving out of your primary home and want to buy another one to live in, you need to find out if you’ll qualify for another mortgage before renting out your house. The bank could consider the rental income the property will generate for your new loan, but that’s not always the case. Call your mortgage lender and begin the conversation before moving forward. 

4. Check with Your Homeowners Association 

If your neighborhood is governed by a homeowners association, there might be some restrictions for renting your house out. Some HOAs don’t have any restrictions while others prohibit renting out houses completely. Some HOAs only allow a percentage or a certain number of homes in the neighborhood to be used as rentals. For example, if the HOA only allows eight houses to be rented out, you might be placed on a waiting list until a slot opens. Some neighborhoods will allow owners to rent out their house if the homeowners are experiencing financial hardship even if the community has reached its limit. You should also find out who is responsible for paying HOA fees each month. Since you agreed to follow HOA rules when you purchased the house, it’s important to revisit them to prevent being fined. 

5. Change Your Homeowners Insurance Policy 

Insurance policies for primary homes are very different than policies for rental properties, so it’s important to switch to a landlord’s policy. If you file a claim with your primary insurance after you convert to a rental, the insurer could deny your claim, causing you to pay out of pocket. Landlord insurance will not only protect you from damage made to the rental property such as a tree falling on the house, but it will also cover legal costs or medical bills if you’re found liable for your tenant’s injuries. Reach out to your insurance company as soon as you decide that you want to begin renting out your home. 

6. Learn About Tax Changes 

It’s recommended to consult an accountant to prepare for your rental property, but there are some basics you should know as a landlord. Your rental income will be taxable, so determine how your tax rate might change. However, once you convert the house to a rental property, you might qualify for tax deductions for rental property expenses including: 

  • Property taxes 
  • Mortgage interest 
  • Repairs and renovations 
  • HOA fees 
  • Landlord insurance policy 
  • Utilities (if you pay for them) 

Reach out to your local municipality or tax advisor and ask about the homestead exemption you probably have on your house. You are only allowed to have the homestead exemption on your primary residence, so find out the next steps if you want to convert your home into a rental. 

7. Get Your Property Ready 

In order to attract renters and set a competitive rent price, you’ll probably need to invest in upgrading your house to increase curb appeal. You don’t have to complete a home makeover all at once. Start by creating a list of the improvements you envision and complete the renovations over time. For example, the rental property might be located in a warm climate so investing in a pool may be worth it, but it’s a luxury amenity that can be put on hold. Low-cost upgrades like adding a fresh coat of paint and some landscaping are a great place to start. Installing a small fountain or mirrors can go a long way as well. Along with renovations, begin making any necessary repairs. Everything in the house should be in working order including appliances, plumbing, and the HVAC system. 

8. Secure the Required Permits 

It’s common for municipalities to require a permit for residential properties that operate as rentals for safety reasons. These types of permits usually aren’t expensive, but a necessary step in many areas. Typically, an inspector from the local government will inspect the property for any potential health and safety hazards. For example, the inspector might check electrical, heating, and adequate exits. The inspector will give the landlord a report listing any necessary changes or repairs that need to be made before the property is compliant. Permit requirements vary depending on the location, so reach out to your local city hall to find out if you need one. 

9. Learn How to Be a Landlord 

Once you decide you want to convert your home into a rental property, begin researching how to become a landlord and how to rent out your house. Research how to handle basic landlord tasks like screening tenants, collecting rent, and completing maintenance requests. You’ll also need to learn how to plan for rental property expenses. If you don’t have the time to manage the property yourself or you want some help as a first-time landlord, you’ll probably want to hire a professional property manager. 

Similar to having an accountant, consulting with an attorney is recommended, but you should have a general understanding of certain laws. Learn about federal and state landlord-tenant laws, along with fair housing laws. You don’t want to violate a tenant’s rights or discriminate against potential tenants, so familiarizing yourself with these laws is essential. As a novice landlord, you’re bound to make mistakes (we all do), so educating yourself will help avoid negative situations and increase your profit. 

 

Owning rental property can help set you up for financial success but converting your home into a rental and becoming a landlord can be intimidating at first. However, with some patience, research, and communication with the appropriate professionals, it’s certainly doable. Apartments.com Rental Tools can help you manage landlord tasks and our blog is filled with articles to answer any of your questions. Embrace the journey and good luck! 


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Considering Buying a Rental Property? Here’s What You Need to Know About Property Managers

By The Lighter Side of Real Estate • July 21, 2025
Considering Buying a Rental Property? Here’s What You Need to Know About Property Managers If you’re considering purchasing a rental property, here’s the good news: they can be a great investment. But they can also be a lot of work, and some homeowners don’t have the skills or desire to put in the work necessary to both take care of their property and ensure it brings in steady income. That’s where property managers come in. A good property manager can bring a ton of value to rental property owners, so if you’re considering buying a rental property, you may also want to consider hiring an experienced, trustworthy property manager. But what, exactly, do property managers do—and how does that help the property owner? A recent article from realtor.com outlines some of their main responsibilities, and the value they can deliver to property owners, including: Market your property. Finding new renters can be a hassle. Property managers leverage a variety of channels (including social media, paid ads, and the MLS) to get your property in front of qualified potential tenants. Vet potential tenants. Once they’ve marketed your property and generated interest, property managers will vet all potential tenants (including running a credit check, checking for past criminal history, verifying employment and income, and calling former landlords for references) to ensure you rent your property to qualified, responsible tenants. Perform property checks. If you live in a different area than your rental property, it can be hard to stay on top of the home’s maintenance and condition. Most property managers do regular home checks (typically, once per quarter or twice per year) to ensure the tenants are taking good care of the property—and will report back if any major repairs or maintenance tasks are necessary to keep the property in good condition.

The Five-Year Rule for Home Price Perspective

By KCM • June 25, 2025
The Five-Year Rule for Home Price Perspective Headlines are saying home prices are starting to dip in some markets. And if you’re beginning to second guess your plans based on what you’re hearing in the media, here’s what you need to know. It's true that a few metros are seeing slight price drops. But don't let that overshadow this simple truth. Home values almost always go up over time (see graph below): While everyone remembers what happened around the housing crash of 2008, that was the exception – not the rule. It hadn’t happened before, and hasn’t since. There were many market dynamics that were drastically different back then, too. From relaxed lending standards to a lack of homeowner equity, and even a large oversupply of homes, it was very different from where the national housing market is today. So, every headline about prices slowing down, normalizing, or even dipping doesn’t need to trigger fear that another big crash is coming. Here’s something that explains why short-term dips usually aren’t a long-term deal-breaker. What’s the Five-Year Rule? In real estate, you might hear talk about the five-year rule. The idea is that if you plan to own your home for at least five years, short-term dips in prices usually don’t hurt you much. That’s because home values almost always go up in the long run. Even if prices drop a bit for a year or two, they tend to bounce back (and then some) over time. Take it from Lance Lambert, Co-Founder of ResiClub: “. . . there’s the ‘five-year rule of thumb’ in real estate—which suggests that most buyers can buffer themselves from mild short-term declines if they plan to own a property for at least that amount of time.” What’s Happening in Today’s Market? Here’s something else to put your mind at ease. Right now, most housing markets are still seeing home prices rise – just not as fast as they were a few years ago. But in the major metros where prices are starting to cool off a little (the red bars in the graph below), the average drop is only about -2.9% since April 2024. That’s not a major decline like we saw back in 2008. And when you look at the graph below, it’s clear that prices in most of those markets are up significantly compared to where they were five years ago (the blue bars). So, those homeowners are still ahead if they’ve been in their house for a few years or more (see graph below): The Big Picture Over the past 5 years, home prices have risen a staggering 55% , according to the Federal Housing Finance Agency (FHFA). So, a small short-term dip isn’t a significant loss. Even if your city is one where they’re down 2% or so, you’re still up far more than that. And if you break those 5-year gains down even further, using data from the FHFA, you’ll see home values are up in every single state over the last five years (see map below): That’s why it’s important not to stress too much about what’s happening this month, or even this year. If you’re in it for the long haul (and most homeowners are) your home is likely to grow in value over time. Bottom Line Yes, prices can shift in the short term. But history shows that home values almost always go up – especially if you live there for at least five years. So, whether you’re thinking of buying or selling, remember the five-year rule, and take comfort in the long view. When you think about where you want to be in five years, how does owning a home fit into that picture? Let’s connect to get you there.

Newly Built Homes May Be Less Expensive Than You Think

By KCM • June 25, 2025
Newly Built Homes May Be Less Expensive Than You Think Do you think a brand-new home means a bigger price tag? Think again. Right now, something unique is happening in the housing market. According to the Census and the National Association of Realtors (NAR), the median price of newly built homes is actually lower than the median price for existing homes (ones that have already been lived in): You read that right. That brand new, never-been-lived-in house may cost less than the one built 20 years ago in a neighborhood just down the street. So, if you wrote off a new build because you assumed they’d be financially out of reach, here’s what you should know. You could be missing out on some of the best options in today’s housing market. Why Are Newly Built Homes Less Expensive Right Now? 1. Builders Are Building Smaller Homes Builders know that buyers are struggling with affordability today. So, instead of building big houses that may not sell, they’re building smaller ones that will. According to the Census, the average size of a newly built single-family home has dropped considerably over the past few years (see graph below): And as size goes down, the price often does too. Smaller homes use fewer materials, which makes them less expensive to build. That helps builders keep prices lower so more people can afford them. 2. Builders Are Offering Price Cuts and Incentives In May, according to the National Association of Home Builders (NAHB), 34% of builders lowered their prices, with an average price drop of 5% . That’s because they want to be sure they’re selling the inventory they have before they build more. On top of that, 61% of builders also offered sales incentives – like helping with closing costs or buying down your mortgage rate. These are all ways builders are making their homes more affordable, so these homes sell in today’s market. Your Next Step? Ask Your Agent What's Available Near You If you're trying to buy a home right now, be sure to talk to your agent to find out what builders are doing in and around your area. They can find new home communities, as well as builders who are offering incentives or discounts, and hidden gems you might not uncover on your own. Plus, buying a newly built home often means there are different steps in the process than if you purchase a home that’s been lived in before. That’s why it’s so important to have your own agent who can explain the fine print. You want a pro in your corner to advocate for you, negotiate on your behalf, and make sure your best interests come first. Bottom Line You could get a home that’s brand new, with modern features, at a price that’s even lower than some older homes. Let’s talk about what you’re looking for and see if a newly built home is the right fit for you. If buying a home is on your to-do list, what would stop you from exploring newly built options?
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