When they got married, Karen Liska Evans, 26, and Greg Evans, 27, found their dream home in Royal Oak, Mich.

But before settling in, they had to decide what to do with the bungalow Greg had purchased, only six blocks away, following college graduation.

The couple quickly decided renting out their hard-to-sell home was the best option.

"Given the crashing home market, which has hit Michigan especially, we would not have been able to sell the home at, or above, the same price we paid for it," Karen says.

Plus, Greg had always wanted to play the part of landlord on a home he'd remodeled. "The timing seemed right," Karen adds.

The couple first looked at their mortgage payments, utilities and taxes to determine their total monthly outlay on the property. Then they compared the amount to other homes listed for rent in the Detroit suburb. They used their prior experience as renters to set the security deposit at one month's rent.

Their second step was finding a tenant. They began by putting out the word about their rental to people they knew. But that provided only a few leads -- and no renters.

Meanwhile, the Evanses decided sprucing up the place a bit wouldn't hurt. In the kitchen, they replaced the microwave and dishwasher, built in a wine rack and added track lighting. They also remodeled the family room to give it a more contemporary look.

Once the updates were completed, Greg and Karen took photos and placed a free posting on the online classifieds community Craigslist.org.

"The responses were immediate and enthusiastic," Karen says. "We had 18 phone calls within the first 24 hours and had the house rented out within three days."

They decided a background check on applicants was a must, particularly with the rental so close to their home. A quick Google search turned up a background check service for $25 a pop. They confirmed the site was legitimate and reliable by reading reviews on landlord Web sites.

And a credit check? A no-brainer.

"It seemed prudent to ensure that we were not going to see our save-money-by-renting-the-house plan turn into a lose-money-by-evicting-tenants issue," Karen says.

Their final step was preparing a lease -- no problem because Karen is an attorney and had experience with lease agreements in her law practice. She also kept copies of lease agreements from her past rental experiences and reviewed those.

"I drafted the lease to include the terms required by Michigan law and terms indicating the responsibilities of the tenants. They pay the utilities and are responsible for lawn maintenance, for example," she says.

After moving in, the tenants asked if they could get a dog, which was prohibited by the lease. An agreement was struck -- and put in writing -- that a dog would be allowed for an additional monthly rental amount and if the tenant took care of the post-move-out cleaning.

Now landlords for nearly a year, Karen and Greg plan to keep renting the property.

"When the residential housing economy regains its footing, we might re-evaluate," Karen says.

But that, she admits, may take a few years.

Karen and Greg offer the following tips for those considering renting out a home:

• Safety first. When showing the property to potential tenants, make sure you're not alone.
• Create demand. If possible, schedule showings 20 to 40 minutes apart, so that as one showing winds up, the next potential renters are arriving. "This will make the house look in demand and people are more likely to fill out an application on the spot," Karen says.
• If you're not an attorney, hire one. While sample lease forms and applications are available online, every state has slightly different housing laws. The sample contracts may not have all the necessary details, such as whether your state requires you to treat the security deposit money in a certain way, Karen notes. Plus, an attorney can help you think of additional clauses that you might not otherwise think of, including additional rent for pets, lawn maintenance and insurance issues.
• Always be prepared. If you're headed out of town or are not handy yourself, have someone you trust on call for fix-it tasks.
• Don't be a stranger. Periodically arrange to check out the rental property, but be aware of any state laws that prevent you from re-entering the premises without the tenant's permission. "This can be done when you're there for routine maintenance anyway," Karen says. Look for wall damage, unauthorized paint colors and the like.

By Darci Smith

Interest.com Contributing Editor

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