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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Thought the Market Passed You By? Think Again.

By KCM • December 9, 2025
Thought the Market Passed You By? Think Again. If you stepped back from your home search over the past few years, you’re not alone – and you’re definitely not out of options. In fact, now might be the ideal time to take another look. With more homes to choose from, prices leveling off in many areas, and mortgage rates easing, today’s market is offering something you haven’t had in a while: options. Experts agree, buyers are in a better spot right now than they’ve been in quite a long time. Here’s what they have to say. Affordability Is Finally Improving Lisa Sturtevant, Chief Economist at Bright MLS, says affordability is finally starting to turn the corner: “Slower price growth coupled with a slight drop in mortgage rates will improve affordability and create a window for some buyers to get into the market.” Mortgage rates have eased from their recent highs, price growth has slowed, and that one-two combo is making homes more affordable than they’ve been in months. There Are More Homes on The Market And a big reason prices are easing is because there are more homes on the market. According to the latest from Realtor.com, there are 17% more homes for sale today than there were at this time last year. That means more options, less competition with other buyers, and a chance to find the space that actually works for you. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), shares : “Homebuyers are in the best position in more than five years to find the right home and negotiate for a better price. Current inventory is at its highest since May 2020, during the COVID lockdown.” Take a look at the numbers. As Yun notes, inventory is up everywhere. Compared to this time last year, every region of the country has more homes on the market than at this time last year (see graph below): That translates to more homes to choose from, whether you’re looking for a bigger backyard, a shorter commute, or finally ditching your rental. But not all markets are the same… When you compare current inventory growth to pre-pandemic norms (2017–2019), the picture changes a bit, depending on where you are (see graph below): The green bars show where inventory has fully recovered (and even grown above pre-pandemic levels) in the South and the West. Supply, however, is still tighter in the Northeast and Midwest, as shown in the red bars, where inventory is still below normal. And here’s why that’s still a win everywhere. When you step back and look at the bigger picture, with inventory up in every region, that means more choices everywhere, even if some areas have more homes for sale than others. And with fewer buyers in the market and more homes for sale, sellers are willing to negotiate to get a deal done. All of that adds up to a win for today’s buyers. And it’s also why working with a local expert really makes a difference. What’s happening in your zip code or neighborhood might look different than the national or regional trend. But the overall takeaway is clear: with more homes on the market, buyers have more leverage than they did a year or more ago. So, if you stepped away from your search because things felt too competitive, too pricey, you were worried about finding a home, or it was all just too much to process, this could be your moment to take another look. And if you’re not quite ready to go all in, that’s okay too. You can start by planning ahead. That means working with a trusted agent who can help you break down your budget, narrow your search, and make sure you're prepped and ready when the right home hits the market. Bottom Line Want to know what’s happening in our area? Let’s have a conversation so you can get a custom overview of what’s available right now and learn how to be ready when the timing is right for you. Because this isn’t 2021. This isn’t even 2023 or 2024. This is a new market – and you might be surprised by what you find.

Are Builders Overbuilding Again? Let’s Look at the Facts.

By KCM • December 6, 2025
Are Builders Overbuilding Again? Let’s Look at the Facts. If it feels like you’re seeing new construction signs pop up everywhere, you’re not wrong. Builders have been busy. And it’s left some people wondering: Are we overbuilding like we did right before the 2008 housing crash ? No matter what you may hear in the news, there’s no reason for alarm. In reality, data shows builders aren’t racing ahead, they’re actually starting to tap the brakes. Builders Are Pulling Back, Not Piling On Permits (applications to start building new homes) are one of the best early indicators for what's next for home construction. And right now, building permits are trending down, not up . Here’s why that’s so important. In the years before the housing crash of 2008, builders really ramped up their production of single-family homes (the red arrow in the graph below). And unfortunately, they built far more homes than the market actually needed. That oversupply led to falling home prices. That’s what so many people remember, and what they worry will happen again. But while construction has been picking back up since roughly 2012, we’re not headed for a repeat of the same mistakes. The latest data available shows builders are actually starting construction on fewer homes right now (the green arrow in the graph below): New data from the National Association of Home Builders (NAHB) confirms that trend. It shows that single-family building permits have fallen for eight straight months . The Slowdown Isn’t Random, It’s Intentional Basically, builders are watching and reacting to today’s economic conditions and buyer demand in real time. And they’re pumping the brakes on their pipelines to avoid getting caught with too much unsold inventory. As Ali Wolf, Chief Economist at Zonda, says : “. . . builders are still working through their backlog of inventory but are more cautious with new starts.” That’s a big contrast to what happened before the housing crash, when overconfidence led to record-breaking levels of new home construction – even as demand was dropping. Today’s builders aren’t overconfident. They’re listening to the market and adjusting before things get out of balance. The Regional Picture Tells the Same Story And while inventory is going to vary a lot based on where you live, if you zoom out and look at regional data, the pattern holds almost everywhere (see graph below): NAHB reports single-family permits are down in nearly every part of the country, with just one region showing a slight uptick. And even there, the growth is so small, it’s practically flat. Why This Isn’t 2008 All Over Again In the lead up to the crash, builders kept building long after demand had disappeared. This time, they’re slowing down early, and that’s a good thing. The market actually needs more homes after years of underbuilding. But builders are making sure they don’t have to overcorrect. They're being intentional about how many homes they’re building right now. So yes, you’re seeing more new homes for sale today, but that doesn’t mean we’re oversupplied nationally. It means buyers finally have more options, and builders are pacing themselves to keep things in check. They’re not going to flood the market. And that’s a really good thing for housing overall. Bottom Line Seeing more new homes for sale doesn’t mean builders are overdoing it. Since building permits have been declining for eight straight months, it’s clear this isn’t an out-of-control boom. It’s a measured recovery. If you want to know more about what builders are doing in our area, let’s connect.

The Housing Market Is Turning a Corner Going into 2026

By KCM • December 1, 2025
The Housing Market Is Turning a Corner Going into 2026 After several years of high mortgage rates and hesitation from buyers, momentum is quietly building beneath the surface of the housing market. Sellers are reappearing. Buyers are re-engaging. And for the first time in what feels like forever, there’s movement happening again. No, it’s not a surge. But it is a shift – and it’s one that could set the stage for a stronger year in 2026. So, what’s driving the comeback? Here are three big trends that are slowly breathing life back into the housing market right now. 1. Mortgage Rates Have Been Coming Down Mortgage rates are always going to have their ups and downs – that's just how rates work. Especially with the general economic uncertainty right now, some volatility is to be expected. But, if you zoom out, it’s the larger trend that really matters most. And overall, rates have been trending down for most of this year (see graph below): And in just the last few months, we’ve seen the best rates of 2025. According to Sam Khater, Chief Economist at Freddie Mac: “On a median-priced home, this could allow a homebuyer to save thousands annually compared to earlier this year, showing that affordability is slowly improving. ” Here's why that matters for you. This shift changes what you can actually afford. It means lower borrowing costs and more buying power. Take this as an example. Data from Redfin shows a buyer with a $3,000 monthly budget can now afford roughly $25,000 more home than they could one year ago. That’s a big deal. And it’s just one of the reasons why activity is picking up. 2. More Homeowners Are Ready To Sell For a while, many homeowners stayed put because they didn’t want to give up their low mortgage rate. That “lock-in effect” kept inventory tight. And while plenty of homeowners are still staying where they are today, the number of rate-locked homeowners is starting to ease as rates come down. Life changes are becoming a bigger part of what’s driving more people to move, and that’s opening up more inventory. Data from Realtor.com shows just how much the number of homes for sale has grown. And the really interesting part is that the market is approaching levels that haven’t been seen for the past six years (see the blue on the graph below): That return to more normal inventory levels is a really good thing. It gives buyers more options than they’ve had in years. And it’s helping to bring the market closer to balance. 3. More Buyers Are Re-Entering the Market And it’s not just sellers making moves. With more options and slightly better affordability, buyers are getting back in the game, too. The Mortgage Bankers Association (MBA) reports purchase applications are up compared to last year, a clear signal that demand is building again (see graph below): And experts think this momentum will continue. Economists from Fannie Mae , the Mortgage Bankers Association ( MBA ), and the National Association of Realtors (NAR) all forecast moderate sales growth going into 2026. Now, this recovery won’t happen overnight. It’s not a flood of activity. But it is the start of steady improvement going into 2026. And that's something a lot of people have been waiting for. Bottom Line After several slower-than-normal years, the market is finally starting to turn a corner. Declining mortgage rates, more listings, and growing buyer activity all point to a market gaining real traction. Let’s connect to talk about what’s happening in our local market and how you can make the most of it in 2026.
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