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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Are Big Investors Really Buying Up All the Homes? Here’s the Truth.

By KCM • January 28, 2026
Are Big Investors Really Buying Up All the Homes? Here’s the Truth. It’s hard to scroll online lately without seeing some version of this claim: “Big investors are buying up all the homes.” And honestly, if you’re a homebuyer who’s lost out on a few offers, that idea probably sounds believable. When homes are expensive and competition is tight, it’s easy to assume giant companies are scooping everything up behind the scenes. But here’s the thing: what people assume is happening and what the data actually shows aren’t always the same. Let’s look at what’s really happening with large institutional investors in today’s housing market – because the numbers tell a much different story than the headlines. The Number Most People Won’t See Online Let’s start with the most important stat. According to John Burns Research & Consulting (JBREC), large institutional investors – those that own 100 or more homes – made up just 1.2% of all home purchases in Q3 of 2025 (see graph below): That’s it. Out of every 100 homes sold, only about 1 went to a large institutional investor. And here’s an important point that often gets missed: that level of investor activity is very much in line with historical norms. It’s not unusually high, and it’s actually well below the recent peak of 3.1% back in 2022 – which itself was still a small share of the overall market. So, while it can feel like big investors are everywhere, nationally, they’re a very small part of overall home sales. Why Investor Activity Gets So Much Attention There are two main reasons this topic gets so much attention: Investor activity isn’t spread evenly. Investors are more active in certain markets, which can make competition feel intense for homebuyers in those areas. As Lance Lambert, Co-Founder of ResiClub, explains:“On a national level, “large investors”—those owning at least 100 single-family homes—only own around 1% of total single-family housing stock. That said, in a handful of regional housing markets, institutional and large single-family landlords have a much larger presence. ” Investor is a broad term. Part of what makes the share of purchases bought by investors sound so big is because many headlines lump large Wall Street institutions together with small, local investors (like your neighbor who owns one or two rental homes). But those are very different buyers.In reality, most investors are small, local owners, not massive corporations. And when all investors get grouped together in the headlines as a single stat, it inflates the number and makes it seem like big institutions are dominating the market (even though they’re not). Yes, big investors exist. Yes, they buy homes. But nationally, they’re responsible for a very small share of total purchases – far smaller than most people assume. The bigger challenges around affordability have much more to do with supply, demand, and years of underbuilding than with large institutions competing against everyday buyers. That’s why it’s so important to separate noise from reality, especially if you’re trying to decide if now is the right time to move. Bottom Line If you want to talk through what investor activity actually looks like in our local market, and how it impacts your options (or doesn’t), let’s connect. Sometimes a little context makes all the difference.

Why January Is the Best Time to Kickstart Your 2026 Home Search

By Inner Circle • January 22, 2026
It’s a new year, and if buying a home in 2026 is on your mind, there’s one simple piece of advice worth hearing first: get started now. Not in March. Not in spring. Not “when the weather gets better.” Now. Why? For starters, buying a home takes time. A recent Realtor.com article suggests getting started at least six months before you plan to close. That doesn’t mean starting in January automatically puts you on track for a June closing. In fact, if you get started now, there’s a good chance you could be in a home much sooner than that. On the flip side, even if you don’t plan to move until later in the year, beginning the process early still puts you in a far stronger position when you’re ready to make offers. You’re almost always better off starting sooner rather than later. There’s a lot involved beyond simply finding a house you like. Financial preparation, getting pre-approved for a mortgage, understanding what you can truly afford, getting a handle on the existing inventory, touring homes, writing offers, negotiating terms, and finally closing — all of that takes time. And that’s before factoring in local competition and inventory. But as we head into this new year, there’s another reason starting early matters even more — and it has everything to do with what’s happening in the market right now… It’s Finally a Buyer’s Market in Many Areas… But It Might Not Last One of the biggest reasons to begin in January is where the market stands right now. In many areas, conditions are unusually favorable for buyers — and that’s not something to assume will stick around. According to recent housing market data , there were roughly 37% more sellers than buyers across the U.S. in November 2025, one of the largest gaps on record going back to 2013. A gap that large can give buyers more negotiating power. It often leads to more options, more time to consider choices, and greater leverage when it comes to price, terms, and requests for seller concessions. But that gap can easily close. Many buyers put off looking for a home until the spring market “officially” begins. That’s in quotation marks because there really is no official date for when the spring market begins. But at some point in the next few months, there will likely be a surge of buyers entering the market. When that happens, competition will increase and many of the advantages buyers enjoy early in the year will likely begin to shrink. Buyers who wait may find themselves facing more multiple-offer situations, tighter negotiations, and less room to ask for concessions. Getting started in January doesn’t just give you a head start — it gives you a shot at taking advantage of conditions that may look very different just a few months from now. The First Thing to Do After the First of the Year If you’re even just thinking about buying a home in 2026, the most productive first step after the new year isn’t scrolling listings or heading out to open houses — it’s having a conversation with a local real estate agent. National headlines are helpful for understanding broad trends, but real estate is extremely local. Conditions can vary dramatically from one city to the next, from one neighborhood to another, and even from one price range to another within the same town. An agent can walk you through what inventory looks like right now, how competitive buyers are in your target price range, and whether sellers are negotiating or still holding firm. They can also help you come up with a timeline and strategy based upon your personal situation and the current market conditions. The Takeaway: Buying a home almost always takes longer than people expect. That’s why many experts recommend starting the process at least six months before you plan to move. That doesn’t mean it has to take that long — plenty of buyers find and close on a home much sooner. But it does mean that giving yourself time is rarely a bad idea. Starting as early in the year as possible is always smart, but starting early in 2026 may be even smarter. With roughly 37% more sellers than buyers — the largest gap we’ve seen since 2013 — today’s market is offering buyers opportunities that may not last once more people jump in later this year. Waiting until spring could mean more competition and fewer advantages than buyers see right now. If you’re even thinking about buying in 2026, getting the ball rolling in January can put you in a much stronger position. And the best first step isn’t browsing listings — it’s talking with a local real estate agent who can explain what’s happening in your market, help you set realistic.

Leased Solar Panels Could Impact Your Buyer’s Ability to Get a Mortgage

By Inner Circle • January 20, 2026
Most homeowners who consider adding solar panels are thinking about a few common goals: They’re environmentally conscious and want to reduce their carbon footprint. They’re looking to save on rising utility costs. They believe solar will increase the value of their home when they sell it. But how they think about paying for the installation is an entirely different conversation. If you have enough cash saved up, are willing to take out a home improvement or solar loan, or have access to other financing options (HELOCs, personal loans, etc.), you can buy and own the system outright. For many homeowners, though, that upfront cost feels daunting — which is exactly why leasing a solar system has become so popular. Solar companies often make leased systems sound almost irresistible: little or no money down, monthly payments that are offset by anticipated savings on your electric bill, and assurances that a future buyer will assume the lease with ease. Many sales pitches even imply that simply having solar is a selling point and adds value to the home. But whether you already took a solar company up on a lease offer, or are considering doing so, you may want to think about how that could impact whether or not your future buyer can buy your house when you go to sell. Some Lenders Will Treat Leased Solar Panels Like Debt One of the more common concerns people raise about how solar panels will impact the future resale of a home is in terms of aesthetics. Some buyers simply don’t like how they look and won’t consider a home with them, which can obviously impact the number of buyers your home will appeal to, and potentially the selling price. However, a leased system can create another issue that goes beyond preference: it can affect whether they can buy your home at all. When a buyer applies for a mortgage, lenders look closely at their financial obligations. Depending on the situation, some mortgage underwriters will treat a leased solar system like a monthly debt payment because the buyer must take over that contract as part of buying the house. So even if your future buyer loves the fact that you have solar panels installed, the lease payments can still count against their debt-to-income ratio (DTI) — one of the core metrics lenders use to determine how much a buyer can borrow. If the lease payment pushes their DTI too high, they might not qualify for the mortgage amount they need, or in some cases, prevent them from qualifying at all. Some lenders and loan programs are more flexible than others, but there’s always a risk that a lease payment can be counted against the buyer’s ability to qualify for the home price you want in certain underwriting scenarios. It’s also worth noting that appraisers typically don’t assign value to leased equipment the way they do for owned solar. If a buyer doesn’t own the panels, an appraiser generally won’t add dollar value to the home based on their presence alone, which may impact the value you and your buyer agreed upon, forcing price renegotiations. What to Do Before Installing a Leased Solar Panel System If you’re still in the decision-making stage — or even if you already have solar installed — and you’re thinking about the resale of your home, it’s worth getting informed before moving forward. One helpful resource many homeowners aren’t aware of is this consumer advisory from the U.S. Department of the Treasury that outlines what to consider before installing solar panels. It covers financing options, ownership vs. third-party arrangements, tax credits, and — importantly — how solar systems can interact with loans and future home sales. It’s a neutral, plain-English guide designed to help homeowners understand the long-term implications of their choices, not just the short-term savings pitch. Reading through guidance like that can help you ask better questions, spot potential red flags in contracts, and understand how different solar arrangements may affect you later, but speaking with a local real estate agent can also be extremely helpful. An agent doesn’t sell solar, and they don’t benefit one way or another from how you finance it — which makes their perspective especially useful. They can help you understand how leased systems are typically received by buyers and lenders in your market, whether similar homes with solar have faced financing hurdles, and what impact (if any) a lease might have on your buyer pool or sale timeline. Real estate is hyper-local. What works seamlessly in one neighborhood or price range may create friction in another. Before installing solar — or before listing a home with a leased system already in place — having an agent weigh in can help you avoid surprises and make decisions that align with both your lifestyle goals and future resale plans. Sometimes, a quick conversation upfront can save you from a much bigger headache later. The Takeaway: Leasing a solar panel system often sounds easier and more appealing than paying outright for it to be installed. However, when you lease, lenders might treat that monthly obligation as debt, which can affect a future buyer’s ability to qualify. If resale matters — whether next year or years down the road — understand your lease terms, explore buy-out or ownership options, and consult with a local agent before installing or listing.
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