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Five Tips for Renting Out Your Home

Renting out your home can be a great way to put extra money in your pocket in case you have to move or if you have just upgraded to a new home and kept your old one. But if you are not careful, renting out your house could cost you more than it should. Here are some tips to protect yourself and your finances if you decide to take on tenants for your home.

1. Downgrade your insurance policy. A homeowner's insurance policy will cover the structure, the property and everything in the home. But if you aren't living there, you should not be insuring the possessions of your tenants. Instead, downgrade your policy to a home rental policy. You can save as much as 20 percent on your premiums by making this simple switch.

2. Update the home before renting it out. As a landlord, it will be your responsibility to make sure the house is up to code and it meets the standards of your jurisdiction. If you know something needs to be fixed, fix it before showing it to potential tenants. You'll have an easier time finding someone to live there if they don't see all the problems with the house that need to be fixed.

3. Change the status of your home with your mortgage company. If you are still paying a mortgage, your lender will need to know that you no longer live in that house. The company may charge you a small fee to change the status and your city may require you to inform them of the change as well.

4. Find a property manager. If you are moving far away from the home you are going to rent out, find a local property manager who will oversee your home. A property manager typically charges about 10 percent of the rent and they take care of everything from finding new tenants to cleaning out the property when tenants move out. However, if you are staying close, you can manage the property yourself and save money.

5. Charge a fair rent. Find out what other similar homes in the area are renting for and determine the rent based on that. Overpricing the rent will chase tenants away and charging too little will cut into your profit margin.