Renters make up 58 percent of households in the District of Columbia, in part due to the large population of college students and political aides. If you own property in the area and have been thinking about putting your house up for rent, it’s important to know the process and follow it.
Unlike in some locales, you can’t just put a “for rent” sign out and start moving people in. DC is one of the most tenant-friendly areas in the country. As a result, you need to get certain paperwork out of the way before you can consider renting.
Let’s take a look at the steps to renting out a house or condo in DC to keep you operating above board.
Get Your Paperwork in Place
If you have a rental house or other property in another state, this is the step that will be most different for you. Unlike most places, DC requires licensing, registrations, and inspection of all rental properties. You are considered a residential rental business and must have the proper paperwork for such before you can start renting.
It’s worth noting that this is for long-term rentals. There are different rules for how to rent out your house for short-term and vacation rentals.
Licensing and Certification
Step one is to get a basic business license for every rental unit you have. The license you choose is based on your type of rental property.
- One-family – single-family homes, townhouses, condos, individual rooms
- Two-family – two-unit building or basement apartment
- Apartment – apartments in buildings with three or more units, even if vacant
Your license is good for two years once issued. As part of the licensing application, you’ll need to show your certificate of occupancy and a Clean Hands Self Certification, which says you don’t owe any money to the DC government.
Registration
Next, you’ll register with the Rental Accommodation Division of the Department of Housing and Community Development related to the rent control laws. Even if you think you’re exempt, you still have to register. You can claim an exemption after you get registered.
The two common reasons for exemption are:
- Own no more than four units
- Building constructed after 1975
The DC rent control laws relate to when and how much you can raise the rent. You have to be registered with the RAD, give a 30-day notice of the increase, and can’t have raised it in the past 12 months.
You’ll also need to register your business with the DC Office of Tax and Revenue, which makes sure you’re properly paying all taxes. You’ll need form FR-500 to do so.
Inspection
Now that you have your license and are properly registered, it’s time for the DCRA inspection. This must be completed within 45 days of getting your license or you’ll have to start the process over again.
The inspector is looking at 17 specific things related to the state and condition of the house, along with whether you have proper certification for water heating, central heating, and air conditioning systems.
Draft Your Lease
It’s good practice to have a written rental agreement with your tenants. You’ll need to give them a copy within seven days of signing, and the lease should include the following at a minimum:
- Description of the unit
- Duration of tenancy
- Amount of rent owed
- When rent is due
In DC, the lease cannot include any kind of waiver of your liability for injuries on the property caused by your negligence or lack of proper maintenance. You can’t ask tenants to waive their rights to a jury trial or to pay your court costs or legal fees.
The lease can include details for late fees, which can’t exceed 5 percent of the rent amount. Note that you need to explicitly state the maximum amount that can be charged to charge at all.
Set Your Rent
Spend some time doing a market analysis to see what the going rate is in your area for similar rentals. This means size, location, and number of bedrooms and bathrooms, at a minimum.
When you set the rent, take into account all your expenses like mortgage, insurance, and maintenance costs to ensure you’re getting enough to cover everything.
It’s important to ensure you set the rent high enough to start since you will be limited in how much you can raise it thanks to the rent-control laws. You’ll only be able to increase it by an amount tied to the Consumer Price Index and no more than 10 percent of the previous amount. If your tenant is elderly or disabled, you’ll be restricted to the CPI for raises.
If your property sits vacant, you can increase the rent by up to 10 percent or the rate of a comparable unit before you lease it again. The total increase can’t be more than 30 percent, and you won’t be able to raise it again for a year.
Find Your Tenants
The last step to answering the question of “how to rent my house” is to find good tenants to live there. It starts with how and where you advertise it. Make sure your listing is accurate and complete and includes your rental criteria like credit score or pet policies.
Make sure you get up-to-speed on what questions you can and can’t ask during tenant interviews. Your questions should be standardized as well to ensure you ask every applicant the same thing.
The formal screening should include a criminal background check, credit check, and verification of income. You want to be sure the tenant you choose can pay the rent and has a history of paying on time.
Interested in Putting Your House up for Rent in DC?
Becoming a landlord in Washington, DC, involves a lot more than handing someone a key and getting money in return. Putting your house up for rent should start with getting all your legal ducks in a row, including proper licenses, inspections, and applications. After that, you can get your lease together, set your rent rate, and begin screening tenants.
Need help running your Washington, DC, rental properties? Contact us for a free market analysis or to learn more about our residential real estate services in DC, Maryland, and Virginia.
