Rental Property How-To: A Guide to Getting Started
Getting started with rental properties can feel like a lot. This rental property how-to breaks the process into clear steps—so you can make decisions based on numbers and systems, not panic and vibes.
Step 1: Start with Savings and a Cushion
If you want rentals to feel less risky, start by getting your finances steady. Alissa shares that having cash reserves reduces anxiety because you’re not one repair away from disaster. A common goal is saving for a 20% down payment so you can avoid PMI, then adding extra funds for cosmetic updates or reserves.
If You Can’t Save 20%, Use the “Live In It, Then Rent It” Strategy
One alternative is buying a home as an owner-occupant, living there for the required time, and then converting it into a rental when you move. It can be an easier path for people who can’t realistically save a full 20% quickly—but it only works if you’re financially disciplined and willing to be intentional.
Before You List, Get Professional Photos
Professional photos are one of the simplest upgrades you can make, because you’ll reuse them every time the property becomes vacant. If the home is still furnished and looks good, that can be a great time to capture photos. If it’s vacant, strong lighting and clean presentation matter even more.
Where to List Your Rental Without Creating Chaos
Resist the urge to post your rental everywhere all at once. Start with one platform, gauge demand, and expand only if needed. The goal is to avoid getting flooded with inquiries you can’t manage—and to keep your process consistent and fair.
Create a Script That Filters Inquiries Fast
One of the best tips in this rental property how-to is creating a copy-and-paste message with your non-negotiable terms. That might include deposit requirements, credit score minimums, pet policies, smoking rules, lease length, income verification, and how rent must be paid. This step alone can eliminate a huge chunk of unqualified inquiries.
Showings: Consider “Open House Style” for Efficiency and Safety
Instead of scheduling one-off appointments all week, you can offer a set window where interested applicants can walk through. This reduces back-and-forth, speeds up leasing, and adds a layer of safety since you’re not alone with a stranger in a vacant house.
Tenant Screening: The Most Important Calls You’ll Make
Background and credit checks matter, but calling the previous landlord can be the most revealing step. Ask if the tenant paid on time, cared for the property, and whether the landlord would rent to them again. Verify employment when possible, and keep your process consistent for every applicant.
Set Up a Simple System for Managing Money
One approach discussed is keeping rental income and expenses in a dedicated account so you’re not mixing personal spending with property funds. The goal is to build reserves for repairs, vacancies, and surprises. Rental income can look exciting until you’re buying a new fence, replacing an appliance, or handling an unexpected repair.
Insurance and Legal Basics to Know
If you convert a primary residence into a rental, you’ll need to update your insurance. Some owners choose to “over-insure” for extra protection, as long as the rent still supports the full monthly cost. LLC questions come up often too, but most mortgaged properties can’t simply be moved into an LLC without consequences—so always check with an attorney and CPA.
Short-Term vs. Long-Term Rentals
Short-term rentals can earn more, but they also require more systems: cleaning coordination, calendar syncing, guest communication, and higher management costs if you outsource. Long-term rentals tend to be more predictable. Choose based on your location, your risk tolerance, and how involved you want to be.
When to Sell a Rental Property
In a strong market, it’s tempting to sell and cash out. But the real question is: what would you buy next? Timing matters, and strategies like a 1031 exchange can create tight deadlines. If you’re considering selling, talk to a CPA about taxes and run the numbers on your next move.
Music:
Straight A’s by Connor Price
The Good Life by Summer Kennedy
Be The One by Matrika
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