Buying a house to rent out isn’t just about collecting monthly checks. It’s about managing people, maintaining a property, and staying ahead of laws that change faster than your renter’s Wi-Fi password. In 2025, renting out property in the U.S. is more competitive, more regulated, and more profitable-if you know how to do it right.
Why Real Estate Rental Still Works in 2025
After the housing boom of 2021-2023, many thought rental demand would drop. It didn’t. In fact, the U.S. is short nearly 4 million rental units, according to Harvard’s Joint Center for Housing Studies. Cities like Austin, Atlanta, and even smaller markets like Raleigh and Nashville are seeing rent growth above 5% annually. Why? More people are choosing to rent-not because they can’t afford to buy, but because they want flexibility. Remote work means people move every 2-3 years. Gen Z and millennials aren’t chasing homeownership like their parents did. They’re chasing convenience.
If you own a home, a duplex, or even a basement apartment, you’re sitting on a cash flow machine. But only if you treat it like a business.
How to Set the Right Rent Price
Setting rent too high? You’ll sit empty for months. Too low? You’re leaving money on the table. The key is matching your price to local comps, not your mortgage.
Start by checking Zillow, Rent.com, and Apartments.com for similar units in your neighborhood. Look at properties with the same number of bedrooms, similar age, and same amenities. Don’t just take the average-look at the median. That’s what most renters actually pay.
Example: In Brooklyn, a 2-bedroom apartment with in-unit laundry and a balcony rents for $3,100-$3,500. If your place has no laundry and a shared yard, aim for $2,700-$2,900. Don’t add $500 just because you renovated the kitchen. Renters pay for location and function, not aesthetics.
Also, factor in utilities. If you’re including water and trash, add $75-$120 to your rent. If tenants pay for everything, you can go slightly lower. Transparency builds trust.
Tenant Screening: Don’t Skip This Step
One bad tenant can cost you $10,000 in lost rent, repairs, and legal fees. Screening isn’t optional-it’s your first line of defense.
Here’s what works in 2025:
- Run a credit check (minimum score of 620)
- Verify income (3x the rent is the standard)
- Check rental history (call previous landlords, don’t just take references)
- Do a criminal background check (only for violent or property crimes)
- Use a licensed screening service like TransUnion SmartMove or Rentberry
Never accept a tenant without a signed application and a non-refundable screening fee ($30-$50). This weeds out tire-kickers and shows you’re serious.
Pro tip: Ask for proof of employment via a recent pay stub or employer contact. Don’t trust screenshots of pay apps like Cash App. Real income shows up on bank statements.
Lease Agreements: Protect Yourself
A handshake and a text message aren’t enough. You need a legally binding lease. Use a state-specific template from a real estate attorney or a trusted platform like Rocket Lawyer or LawDepot.
Key clauses to include:
- Security deposit amount and return policy (must follow state law-max is usually 1-2 months’ rent)
- Rules on pets, smoking, subletting, and noise
- Who pays for repairs (plumbing, HVAC, appliances)
- Notice requirements for entry (24-48 hours in most states)
- Consequences for late rent (grace period, late fee caps)
Never handwrite your lease. Typed, signed, and dated copies go to both parties. Keep a digital backup. If a tenant claims you never gave them a copy, you lose in court.
Property Maintenance: The Hidden Cost
Most new landlords think maintenance is a minor expense. It’s not. Budget 1% of your property’s value each year for upkeep. A $300,000 home? That’s $3,000 a year. That’s $250/month.
Common repairs you’ll face:
- Water heater failure (avg. cost: $800-$1,500)
- AC unit breakdown (avg. cost: $1,200-$3,000)
- Leaky roof or foundation cracks (avg. cost: $2,000-$10,000)
- Broken locks or door hinges (avg. cost: $150-$400)
Set aside a maintenance fund. Don’t use rent money. Open a separate bank account. Even if you don’t spend it this month, you’ll need it next year.
Also, build a network of reliable contractors. A good plumber who shows up on time is worth their weight in gold. Keep their numbers saved. Don’t wait for a burst pipe to Google "emergency plumber near me."
Property Management: Do It Yourself or Hire Help?
Managing a rental takes 5-10 hours a month. That’s time you could spend working, sleeping, or doing anything else. If you’re not willing to handle calls at 11 p.m. because the toilet’s overflowing, hire a property manager.
Property managers charge 8-12% of monthly rent. For a $2,500 unit, that’s $200-$300/month. Is it worth it? If you work 50 hours a week, live out of state, or hate dealing with angry tenants-yes.
But if you’re local, organized, and don’t mind being on call, you can save that money. Use apps like Buildium or Avail to automate rent collection, maintenance requests, and lease renewals. They cost $10-$30/month and cut your workload in half.
Tax Benefits You’re Probably Missing
Rental income is taxable-but so are your expenses. You can deduct:
- Mortgage interest
- Property taxes
- Insurance
- Repairs and maintenance
- Utilities if you pay them
- Property management fees
- Travel to the property for inspections
- Depreciation (this is huge-spread the cost of the building over 27.5 years)
Example: You earn $30,000 in rent but spend $22,000 on expenses and depreciation. Your taxable income is $8,000. That’s a massive difference.
Keep every receipt. Use a free app like QuickBooks Self-Employed or Stessa to track everything. Talk to a CPA who specializes in real estate. Don’t rely on TurboTax alone.
What Not to Do
Here are the top 3 mistakes new landlords make:
- Skipping tenant screening to fill the unit fast
- Not having insurance (liability and property damage coverage are non-negotiable)
- Ignoring state and local laws (like rent control in NYC, CA, or Oregon)
Also, don’t be a landlord who shows up unannounced. Don’t threaten eviction over a late payment. Don’t accept cash without a receipt. These aren’t just bad practices-they’re legal risks.
Where to Find Good Rental Properties in 2025
If you’re looking to buy your first rental, focus on markets with:
- Population growth (no decline in the last 5 years)
- Job growth (tech, healthcare, logistics)
- Low property taxes
- Strong rental demand (look for areas near universities, hospitals, or transit hubs)
Top markets in 2025: Phoenix, Tampa, Charlotte, Boise, and Atlanta. Avoid overpriced cities like San Francisco and Manhattan unless you’re buying a luxury unit with long-term tenants.
Look for properties built between 1980 and 2010. They’re modern enough to attract renters but not so new that they’re overpriced. Avoid fixer-uppers unless you’re a contractor. Renovations eat cash fast.
Final Thought: It’s a Business, Not a Hobby
Rental real estate isn’t passive income. It’s active income with long-term rewards. The best landlords don’t just collect rent-they build relationships, stay informed, and plan ahead. They know that a well-maintained property with a reliable tenant is worth more than a fancy listing with a bad credit score.
If you’re ready to start, pick one step: screen a tenant, calculate your first property’s cash flow, or call a local real estate attorney. Don’t wait for the perfect moment. The market won’t wait for you.
Can I rent out my house if I still have a mortgage?
Yes, but check your mortgage agreement first. Most lenders require you to inform them if you plan to rent. Some may require you to switch to a landlord loan, which usually has a higher interest rate. You can’t rent out a home under a primary residence loan without permission-it’s considered fraud.
How much should I save for a rental property down payment?
Most lenders require 20-25% down for investment properties. Some programs offer 15%, but you’ll pay higher interest and mortgage insurance. A 20% down payment gives you better rates and lowers your monthly payment, which improves your cash flow. Don’t go lower unless you have strong emergency savings.
What’s the best way to handle security deposits?
Store the deposit in a separate interest-bearing account, as required by law in most states. Return it within 21-30 days after the tenant moves out, minus deductions for damage beyond normal wear and tear. Provide a written itemized list of deductions. Failing to do this is a common reason tenants sue.
Do I need rental insurance?
Yes. Standard homeowner’s insurance doesn’t cover rental properties. You need landlord insurance, which covers property damage, liability, and loss of rent if the unit becomes uninhabitable. It costs $1,000-$2,500 per year depending on location and coverage. Don’t skip it.
Can I evict a tenant for not paying rent?
Yes, but you must follow the legal process. You can’t change the locks, shut off utilities, or harass the tenant. First, send a formal notice (usually 3-5 days to pay or quit). If they don’t pay, file an eviction lawsuit in court. Only a sheriff can remove a tenant. Skipping steps can lead to lawsuits or fines.
10 Responses
Let me guess - you bought a place in Austin thinking you’d be rich by now. Newsflash: your ‘cash flow machine’ is now a $2k/month maintenance nightmare after the AC died and your tenant ‘accidentally’ flooded the kitchen. You didn’t just rent a property - you adopted a chaotic roommate who never pays on time and thinks your plumbing is their personal spa.
And don’t even get me started on ‘tenant screening.’ I once accepted a guy who showed up with a pitbull, a guitar, and zero income proof. Three weeks later, he was gone - left behind a hole in the wall, a broken toilet, and a note that said ‘thanks for the free couch.’
I have been renting out a small flat in Hyderabad for the past five years, and I can tell you that the principles mentioned here are universal - but the cultural context changes everything. In India, tenants often expect you to be more involved, more available, and more forgiving. A late rent payment isn’t always negligence - sometimes it’s a family emergency, a medical bill, or a delayed salary.
I don’t use automated screening services because most of my tenants are from middle-class families who don’t have credit scores - they have references, handwritten letters from employers, and sometimes even a local priest who vouches for them. I still check income, but I look at bank statements over three months, not one pay stub. And yes, I’ve had tenants who stayed for seven years because I treated them like family - not like liabilities.
Also, I never charge a security deposit above one month’s rent. The law here is strict, and I’ve seen landlords lose cases because they took too much. It’s not about profit - it’s about trust.
And about depreciation? In India, we don’t really use it for tax purposes. The system is different. But I still track every expense. Because even if the government doesn’t care, your sanity does.
Oh honey, you think you’re running a business? You’re running a glorified Airbnb with a lease and a prayer.
You’re out here talking about ‘median rent comps’ like it’s rocket science, but you didn’t even mention that half your tenants are using your Wi-Fi to stream 4K porn and run crypto rigs that fry your router every three weeks. And your ‘maintenance fund’? That’s just a fantasy until the roof caves in during monsoon season and your tenant texts you at 3 a.m. asking if you ‘have a bucket.’
And don’t get me started on ‘landlord insurance.’ You think you’re protected? Nah. You’re one lawsuit away from losing your house because your tenant slipped on a wet tile you ‘forgot’ to fix - and now they’re suing for emotional distress because their ‘spiritual yoga practice’ was interrupted.
Also, depreciation? Please. The IRS doesn’t care that your 1987 dishwasher is held together by duct tape and hope. They’ll audit you for ‘excessive deductions’ because you claimed ‘$800 for plumbing’ but your plumber is your cousin who charges you in pizza.
And don’t even think about renting to Gen Z. They don’t pay rent - they pay vibes. And if you don’t have a TikTok account and post ‘Landlord Life’ reels, they’ll leave you a 1-star review on Zillow titled ‘Toxic Energy, No Soul.’
Love this breakdown - especially the part about not overpricing because of a renovated kitchen. I learned that the hard way. Put in new quartz counters and thought I could charge $500 more. Nope. Tenant moved out after two months. New one? Paid $300 less and stayed three years.
Also, the point about utilities is gold. I started including trash and water last year - even though it added $90 to rent - and my vacancy rate dropped from 12% to 3%. People hate juggling bills. Give them one number, and they’ll stay.
One thing I’d add: don’t underestimate the power of a good first impression. I started sending a welcome packet with local tips, a list of reliable contractors, and a handwritten note. It sounds small, but it cuts down on ‘emergency’ calls by like 60%. Tenants feel seen, not just exploited.
And yeah, property managers? I tried one. Charged 10%, took 3 weeks to respond to a leak, and then charged me extra for ‘administrative fees’ to send a text. I fired them. Now I use Avail, reply within 2 hours, and my tenants send me cookies at Christmas. Weird, right? But it works.
They’re lying to you. All of them. The ‘rental demand’ is fake. The government is printing money, inflation is eating your savings, and they’re using this ‘rental crisis’ to push you into buying overpriced property so they can tax you later.
And don’t believe those ‘top markets’ - Phoenix? Tampa? Those are just the last places before the collapse. When the dollar crashes, your ‘cash flow’ turns into a pile of worthless bills. And your ‘tenant screening’? They’re all on government assistance. You think they care about credit scores? They don’t even have bank accounts.
Also, depreciation? That’s a scam. The government lets you write off your house over 27.5 years so you feel like you’re making money - but when you sell, they take it all back with recapture tax. You’re not building wealth - you’re just delaying bankruptcy.
And the ‘property manager’? They’re just middlemen who take your money and then disappear when the tenant trashes the place. You think you’re saving time? You’re just outsourcing your problems to someone who doesn’t care.
Bottom line: Don’t buy. Don’t rent. Just keep your cash under the mattress. At least then you know where it is.
It’s so sad how people treat rental properties like ATMs instead of homes. You’re not a landlord - you’re a steward. You have a responsibility to provide safe, decent housing. Not to squeeze every penny out of people who are already struggling.
And why do you think renters can’t afford homes? Because landlords like you keep jacking up prices and ignoring rent control laws. You’re not ‘building wealth’ - you’re contributing to a housing crisis.
Also, screening tenants? You’re just trying to keep out the poor, the disabled, the single moms, the immigrants. That’s not business - that’s discrimination dressed up as ‘risk management.’
I’ve seen people evicted for having a pet they got after the lease was signed - a rescue dog that helped them through depression. And you call that ‘good management’? No. That’s cruelty with a contract.
Maybe instead of worrying about depreciation and late fees, you should ask yourself: Am I helping people, or just profiting from their desperation?
How quaint. You speak of ‘median rent comps’ and ‘TransUnion SmartMove’ as if this is a meritocracy. In reality, this entire system is a colonial relic - a mechanism for extracting wealth from the working class under the guise of ‘investment.’
You think your ‘$3,000/month Brooklyn unit’ is a smart play? You’re just another gentrifier who moved in, flipped a unit, and now thinks you’re a visionary because you didn’t put in carpet.
And let’s not pretend your ‘maintenance fund’ is altruistic. You’re not saving for the roof - you’re saving for your next vacation. Your ‘reliable contractors’? They’re paid under the table. Your ‘digital backup’? It’s stored on a server in Delaware owned by a corporation that doesn’t give a damn about your tenant’s asthma.
Depreciation? You’re writing off a building that was built on the backs of immigrant labor. Your ‘tax benefits’? They’re subsidized by the very people you refuse to pay living wages.
And don’t get me started on ‘Gen Z preferring flexibility.’ Flexibility? No, they’re fleeing a system that priced them out of ownership - and you’re calling that ‘trend,’ not injustice.
You’re not a landlord. You’re a rentier. And rentiers don’t build wealth - they extract it.
Really solid guide. I’ve been renting out a duplex in Cork for the past 8 years, and everything here rings true - especially the part about treating it like a business. I used to be the ‘nice landlord’ who’d waive late fees, fix stuff on weekends, and never charge for minor wear and tear. Ended up with a tenant who left the place trashed and owed me three months’ rent.
Now I use a legal template, require proof of income via bank statements (no Cash App screenshots - seriously, people), and charge a $40 screening fee. It filters out the flakey ones. And I’ve never had a legal issue since.
Also, property management: I tried hiring someone. Cost me €300/month. They missed three repair requests. I fired them. Now I use Avail + a local handyman I pay cash for small jobs. Saves me €2k a year and I still respond within 2 hours.
One thing I’d add: always get a photo inventory before the tenant moves in. Even if it’s just your phone. Saves you from ‘I didn’t know the fridge was broken’ nonsense later.
Wow. You wrote a 2,000-word essay on how to rent a house and didn’t mention the one thing that actually matters: tenants are people.
You’re so busy optimizing rent prices, screening for credit scores, and dodging liability that you forgot the whole point: if you treat people like problems, they’ll act like problems.
I had a tenant who was a single mom working two jobs. She was late once - because her kid got sick. I didn’t charge a fee. I asked if she needed help. She paid me back in installments. We’re still in touch. She sent me a thank-you card last Christmas.
Meanwhile, you’re out here calculating depreciation like it’s a spreadsheet game and wondering why your units sit empty.
Maybe stop trying to game the system. Just be decent. The money follows.
Also - no, you don’t need a lawyer to draft a lease. You need a heart.
And here’s the kicker - the guy who sent the thank-you card? He’s the one who called me at 2 a.m. last week because the toilet exploded. I didn’t charge him. I showed up with a wrench and a six-pack. We fixed it together.
Turns out, being a decent landlord doesn’t cost you money.
It costs you time.
And that’s the real rent.