Property Management Blog

Renting Out Your Home in California: Everything You Should Consider

Pinnacle Property Management - Tuesday, September 14, 2021

Renting Out Your California Home Pinnacle Property Management

Are you thinking of renting out your California house? If you are, then it may be a great idea. The state has arguably one of the largest renter populations in the country, and that’s a testimony to the huge rental demand that exists there. 

Before renting out your house, however, there is a myriad of things that you’ll need to familiarize yourself with. You see, being a landlord is a big responsibility and commitment, and one that shouldn’t be taken lightly. 

Pinnacle Property Management has put together a list of some of the things you need to know before embarking on your landlord journey. 

1. Landlording Responsibilities

First and foremost, sit down and determine whether being a landlord is right for you. Sure, renting out a home comes with a ton of benefits, from a recurring income to tax breaks and everything in between. 

But, being a landlord isn’t just a matter of sitting back while letting the money roll in. 

Some of the responsibilities that come with being a landlord include:

  • Staying on top of repairs and maintenance.
  • Collecting rent and following up on missed payments. 
  • Keeping an eye on the property through regular inspections. 
  • Responding to tenant complaints. 
  • Marketing the unit when a tenant moves out. 
  • Screening prospective tenants. 

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2. Lease Agreement

This is also another thing you’ll need to familiarize yourself with. While not required by law, most landlords in California require it before lease signing. And understandably so, it’s an important document that lays out each party’s rights and responsibilities. 

A good lease agreement, it goes without saying, is one that sets out your expectations and is as detailed as possible. Your lease agreements should be clear on things like:

  • Rent details, such as the amount, late fees, grace period, and modes of payments. 
  • The rights and responsibilities of each party. 
  • The responsibility for payment of utilities. 
  • Important rules, such as on subletting and pets.

3. Insurance

As a landlord, you’ll need a special insurance subscription in order to safeguard yourself and your property. Specifically, you’ll need a landlord’s insurance cover. The coverage generally includes the dwelling itself and your rental income. 

Note, however, that a landlord’s insurance doesn’t cover the tenant and their belongings. That’s why it may be imperative to require your tenants to have a renter’s insurance cover. A renter’s insurance policy can help cover your tenant’s belongings should they get damaged, stolen, or destroyed. 

4. Landlord-Tenant Laws

Another thing you’ll need to familiarize yourself with is the tenancy laws. The relationship between landlords and tenants in California is governed by a smorgasbord of laws.

Some examples of landlord-tenant laws are:

  • Habitability Laws. This law requires that landlords maintain their rental units to habitable standards. Basically, it means, among other things, providing drinkable water, hot water, heat during the cold weather, and ensuring electrical, plumbing, and other systems are in conformity to building codes. 
  • Security Deposit Laws. The state of California, just like other states, has rules on security deposits. The rules are meant to protect both the landlord and the tenant. The rules stipulate, for example, how much deposit landlords can charge and when they should return the deposit back to the tenant. 
  • Fair Housing Act. Passed in Congress in 1968, the Fair Housing Act aims to stamp out all forms of discrimination in housing-related matters. It specifically makes it unlawful for landlords to discriminate against their tenants based on certain protected characteristics. In California, some of the protected characteristics include race, color, religion, marital status, gender identity, and sexual orientation. 

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5. Rental Price

One of the biggest reasons why people rent out their homes is to earn passive monthly income. But how successful you are with that depends on how much rent you charge your tenants. 

If you set a high rental price, chances are prospective tenants will shun your home. And if you set a low rental price, you’ll be effectively leaving money on the table. Clearly, neither of the two scenarios is good for your bottom line. 

So, to successfully rent out your house in California, you’ll need to set the right rental price. According to the 1% Rule, the monthly rent you collect on your investment property should be equal to or greater than 1% of the purchase price. 

6. Property Marketing

To maximize your income, you’ll need to keep the home occupied by a tenant. But as you’ll soon realize, vacancies will be inevitable no matter what you do. And when your property becomes vacant, you’ll need to do everything possible to find a replacement tenant. 

You’ll want to have an effective marketing process that ensures your home is rented quickly because every day that your home is vacant means lost income. A good marketing strategy is one that incorporates both online and offline platforms and will be focused on attracting the target market based on your California property's location.

7. Tenant Screening

Naturally, you’ll start getting inquiries as soon as you are done listing your home. This is, of course, if you’ve done your marketing right. 

The goal of screening tenants is to ensure that you choose a reliable and dependable tenant. Obviously, the last thing you’ll want is to rent to a difficult tenant that constantly disrupts their neighbors, doesn’t report maintenance issues on time, causes negligent property damage, and never pays rent on time – if at all they do. 

A good screening process is one that examines a tenant on four basic things. That is income level, creditworthiness, credit history, and rental background. 

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8. Property Management Services

Renting out your house in California may seem like a simple task, but it definitely isn’t. Hiring a property manager can help you navigate the many complexities that come with being a landlord. 

A good manager will help you, among other things, draft a legal lease, ensure your property is legally binding, collect rent and make follow-ups, and maintain the unit to required standards. 

The Bottom Line

If done well, renting out a house can be lucrative. But just like everything else in life, it sure does come with its own fair share of pitfalls. If you’re just starting out, hiring a professional can be a great option. 

Get in touch with Pinnacle Property Management to learn more!

Pinnacle Property Management
CA DRE # 01905815
22700 Crenshaw Blvd.
Torrance, CA 90505
Ph: (310) 530-0606
Fax: (310) 626-9786

We are open from 8:30am to 5:00pm M-F.

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