You do not have to buy an investment property to become a real estate investor.
Sometimes you already own it.
Maybe you are leaving the area for a new job, moving into another home, inheriting a property, or trying to sell but are not satisfied with the offers you are receiving.
Instead of selling, another option starts to make sense:
What if I keep the house and rent it?
We have worked with many owners who became landlords unexpectedly. Some thought renting would be a temporary solution. Over time, many discovered benefits of real estate ownership they had not previously considered. Some ultimately kept their former homes as long-term investments, and some went on to purchase additional rental properties.
But there is an important difference between owning a home and operating a rental property.
The biggest change is often a mental one:
This is not simply your former home anymore. It is an investment.
Quick Answer: What Should You Do If You Become an Accidental Landlord?
Start by determining whether the property makes sense as a long-term rental investment. Prepare it for residents, change your insurance to appropriate landlord coverage, establish several months of financial reserves, understand Nevada landlord requirements, review HOA rules, determine a realistic market rent, put a leasing process in place and decide whether you want to manage the property yourself.
If you are considering short-term rental use instead, treat that as a separate decision. Short-term rentals in the Las Vegas Valley are subject to local licensing and operating requirements that vary by jurisdiction.
Key Takeaways
- Evaluate your former home as an investment before deciding to rent it.
- Extreme summer heat makes HVAC reliability especially important.
- HOA requirements should be reviewed before advertising.
- Long-term and short-term rentals are very different regulatory categories locally.
- Change owner-occupied insurance to appropriate landlord coverage.
- Keep several months of property expenses available for vacancy and repairs.
- Price the property based on competing rentals, not your mortgage payment.
- Nevada has its own requirements for leases, deposits, disclosures and landlord procedures.
How Do Homeowners Become Accidental Landlords?
An accidental landlord owns a property that was not originally purchased to be a rental.
You might be relocating but do not want to sell. Perhaps you purchased another home before selling the first one. You may have inherited the property or decided that the sale price available today is not enough to justify giving it up.
Existing financing can also matter.
If you have an attractive long-term fixed-rate mortgage, selling means giving up that financing along with the property.
Unlike someone intentionally purchasing an investment, you probably did not evaluate the home based on rent, vacancy, operating expenses and expected return when you bought it.
Now you need to.
Would You Buy This Property Today as an Investment?
This is a useful way to remove some of the emotion from the decision.
Pretend you do not already own the home.
If someone offered it to you today as a rental investment, would you buy it?
Estimate a realistic market rent and compare it with the costs of ownership:
- Mortgage payments
- Property taxes
- Landlord insurance
- HOA assessments
- Maintenance and repairs
- Landscaping and pool service, where applicable
- Vacancy
- Property management, if applicable
- Future capital expenses
Then look beyond immediate cash flow.
Real Estate Can Produce Returns in Several Ways
Many first-time landlords focus almost entirely on the difference between rent and the mortgage payment. That is only part of the picture.
Mortgage paydown. Principal payments gradually reduce the loan balance and can increase equity.
Long-term fixed-rate financing. Favorable existing financing can have real value, particularly if replacing it would mean borrowing at a higher rate.
Potential appreciation. Property values may increase over a long holding period, although appreciation is never guaranteed.
Tax benefits. Residential rental property may generally qualify for depreciation once it is ready and available for rent, subject to federal tax rules. IRS Publication 527 explains federal residential-rental rules, including conversion of a former residence to rental use.
Future financing flexibility. Depending on values, rates and lending conditions, owners may eventually have opportunities to refinance or access equity without selling.
The better question is not simply "Will the rent cover my mortgage?" It is: "Does this property make sense as a long-term investment for me?"
Stop Thinking Like a Homeowner
This is one of the biggest adjustments for an accidental landlord.
The home may contain finishes you personally chose, landscaping you spent years improving, or features that matter to you because you lived there.
Those connections are normal.
But rental-property decisions need a different standard.
Instead of asking "How would I want this if I still lived here?" ask "What decision makes sense for this property as an investment?"
That can change the way you approach repairs, upgrades, landscaping, pets, pricing and maintenance.
It also means asking for help when you are dealing with something unfamiliar.
In our experience, first-time landlords often do not know everything necessary to prepare and operate a rental property. There is no reason they should. They have never needed to know before.
The important thing is not to guess.
Prepare the Home for Las Vegas Heat
A home that was comfortable for you is not automatically ready to become a rental.
The objective is not to renovate everything. It is to provide a property that is safe, functional, clean, maintainable and prepared for a resident.
In this market, air conditioning deserves particular attention.
A system that is barely keeping up is something to address before placing a resident in the home. Extreme summer temperatures make HVAC reliability an operational necessity rather than a cosmetic issue.
Depending on the property, also evaluate:
- Major appliances and mechanical systems
- Plumbing and electrical systems
- Locks, doors and windows
- Smoke and carbon-monoxide alarms where applicable
- Landscaping and irrigation
- Pools and pool equipment
- HOA-related property standards
- Overall cleanliness and condition
Deferred maintenance tends to become a resident maintenance request eventually.
It is usually better to address known issues before move-in.
For a detailed preparation checklist, see our Las Vegas Rent-Ready Property Standards.
Review HOA Requirements Early
HOAs are an important part of the rental decision for many properties throughout the Las Vegas Valley.
Before advertising, review the association's current governing documents and determine what requirements apply to rental use.
There may be rules involving:
- Minimum lease terms
- Resident registration
- Providing lease information
- Property condition
- Parking
- Community access
- Other rental procedures
Traditional long-term rentals may be permitted even when short-term rentals are restricted.
That distinction is important.
Do not wait until after signing a lease to discover that the association has requirements you should have addressed beforehand.
Long-Term Rental or Short-Term Rental? Decide Early
A homeowner thinking, "I will just rent the property" should first decide what kind of rental they mean.
A traditional long-term rental and a vacation or short-term rental are not interchangeable in the Las Vegas Valley.
Short-term rental requirements depend on the property's exact jurisdiction. A property with a Las Vegas mailing address may actually be in the City of Las Vegas, unincorporated Clark County, Henderson, North Las Vegas or another jurisdiction.
Those areas have different licensing and operating rules.
HOA restrictions can add another layer.
If your objective is simply to convert a former residence into a traditional long-term rental, the process is very different from operating an Airbnb or vacation rental.
Make that decision before you begin planning the rental strategy.
For short-term rental research, start with the applicable local jurisdiction. Clark County provides short-term rental guidance for unincorporated Clark County, while the City of Las Vegas publishes its own short-term rental requirements.
Change Your Insurance Before the Property Is Rented
Tell your insurance professional when an owner-occupied home becomes a rental.
Coverage designed for your residence is not the same as coverage designed for a landlord.
Make sure the policy reflects the property's new use.
Liability coverage deserves attention as well.
We generally recommend that rental-property owners discuss $500,000 to $1 million of liability coverage with their insurance professional. In our experience, increasing liability limits can often be relatively inexpensive compared with the additional protection provided.
Your insurance professional should determine the appropriate coverage for your circumstances.
Keep Several Months of Expenses Available
Rental ownership comes with irregular expenses.
You may go months without a major problem and then suddenly need a significant repair. A resident may move out and the property may require work before the next tenancy. Vacancy may last longer than expected.
We generally suggest having several months of property expenses readily available for vacancies and unexpected repairs.
A property with older HVAC equipment, a pool or other maintenance-intensive features may warrant a larger reserve than a newer, simpler home.
The important thing is having money available when the property needs it.
Price for the Market, Not for Your Mortgage
Market rent has nothing to do with what you need the property to rent for.
Your mortgage might be $2,500 per month. That does not mean the market will pay $2,500.
Or you may have owned the property for years and have a very low mortgage payment. That does not mean you should accept less than market rent.
Prospective residents compare your property with other homes available to them.
Set rent based on:
- Comparable rentals
- Current competing listings
- Location
- Property size and condition
- Amenities
- Renter activity
Then pay attention to what happens after listing.
Vacancy has a real cost. Holding out for an unrealistic rent can cost considerably more than adjusting the price and placing a qualified resident sooner.
Nevada Landlord Rules Are Different
Nevada has its own landlord-tenant laws.
Do not assume that procedures you have heard about in Arizona, California or another state apply here.
Nevada Revised Statutes Chapter 118A addresses rental agreements, disclosures, security deposits, habitability, fees, notices and other aspects of the landlord-resident relationship.
Written rental agreements must address several specific subjects, and landlords also have disclosure requirements.
Security-deposit rules are another example: Nevada currently limits the combined security deposit or surety bond, including last month's rent, to three months' periodic rent.
Federal Fair Housing requirements apply as well, and federal lead-based-paint disclosure rules may apply to housing built before 1978.
You do not need to personally become an expert on every statute.
You do need a lease, procedures and professional resources that comply with the laws that apply to your property.
Build Your Leasing Process Before You Advertise
Before advertising, decide how you will:
- Market and show the home
- Handle applications consistently
- Establish screening criteria
- Verify applicants
- Comply with Fair Housing requirements
- Prepare a Nevada-compliant rental agreement and disclosures
- Collect funds
- Document property condition
- Transfer possession
- Collect rent
- Communicate with the resident
- Handle maintenance
Finding someone who wants the property is not the finish line.
It is the beginning of the landlord-resident relationship.
Should You Manage It Yourself?
You can manage a rental yourself.
Make sure you understand what that means first.
Who will respond if the air conditioner fails during the summer? Who will coordinate repairs, communicate with the resident, track rent, deal with HOA issues, prepare renewals and handle the move-out?
If you are becoming a landlord because you are moving away, distance makes those responsibilities harder.
Some owners enjoy managing their own properties. Others decide that professional management makes more sense.
The right decision depends on your time, experience, proximity to the property and interest in doing the work.
What We Have Seen With Accidental Landlords
We have worked with many people who became landlords without originally planning to.
Some tried to sell a home but did not receive the value they hoped for. Renting seemed like a temporary alternative.
Over time, their perspective sometimes changed.
The mortgage balance declined. Equity accumulated. Rental income helped support the property. They learned more about depreciation, financing and the other potential benefits of real estate ownership.
What started as Plan B became an investment they wanted to keep.
Some accidental landlords eventually became intentional investors and purchased additional rental properties.
That outcome is not guaranteed, and selling can absolutely be the right decision.
But do not dismiss rental ownership simply because becoming a landlord was not part of your original plan.
Accidental Landlord Checklist
- Evaluate the property as an investment. Estimate realistic rent, expenses and long-term objectives.
- Make the mental shift. Start making decisions for an investment rather than your former residence.
- Decide whether you mean long-term or short-term rental. The regulatory requirements are very different.
- Get the home rent-ready. Pay particular attention to HVAC, safety, major systems and deferred maintenance.
- Review HOA requirements. Understand the rules that apply to rental use.
- Update your insurance. Obtain appropriate landlord coverage and discuss liability limits.
- Talk with your tax professional. Understand the implications of converting a residence into rental property.
- Establish reserves. Keep several months of property expenses accessible.
- Determine market rent. Use current rental-market evidence.
- Establish your leasing process. Use appropriate screening, documentation and Nevada rental agreements.
- Decide who will manage the property. Understand the practical responsibilities before choosing to self-manage.
Frequently Asked Questions
Do I need to change my homeowners insurance if I rent out my home?
Generally, yes. Contact your insurance professional and obtain coverage appropriate for a rental property before a resident moves in.
How much money should I keep in reserve?
We generally recommend having several months of property expenses readily available for vacancies and unexpected repairs. Consider the condition of major systems such as HVAC when deciding how much you need.
Can I rent a home that is in an HOA?
Often, yes, for traditional long-term rental use, but review the association's governing documents before advertising. Requirements may differ substantially for short-term rentals.
Can I turn my home into an Airbnb or other short-term rental?
Possibly, but do not assume you can. Short-term rentals are regulated locally throughout the Las Vegas Valley, and requirements depend on the property's exact jurisdiction. Licensing and HOA requirements may also apply.
How much security deposit can a Nevada landlord charge?
Nevada currently limits the combined security deposit or surety bond, including last month's rent, to no more than three months' periodic rent. Owners should verify current requirements when establishing leasing policies.
How do I know what the property should rent for?
Compare it with current competing and comparable rentals, considering location, size, condition and amenities. Your mortgage payment does not determine market rent.
Can I manage the property after moving out of Nevada?
It may be possible, but distance can make emergencies, maintenance, inspections and resident issues more difficult. Consider those practical demands before choosing to self-manage.
Is it better to rent or sell?
It depends on market rent, expenses, existing financing, equity, taxes, property condition, expected holding period and your goals. Evaluate the complete investment rather than basing the decision solely on today's sale price.
An Accidental Landlord Can Become an Intentional Investor
Becoming a landlord unexpectedly does not mean you made a mistake.
You may simply own an investment you never intended to buy.
Understand what the property can realistically produce. Prepare it properly. Learn your responsibilities. Consider both the costs and the long-term benefits.
Then decide deliberately whether you want to keep it.
Your former home may turn out to be an investment worth holding.
Need Help Turning Your Home Into a Rental?
If you are considering renting a home in the Las Vegas area and are not sure where to begin, we are happy to help.
Here at Rentals America, we can help you understand what the property may rent for, what it needs before being offered to residents, and what professional management would look like if you would rather not handle everything yourself.