The Ultimate Guide to Renting Out Your Home in Michigan

Renting out your home can be a great way to generate extra income and take advantage of the Michigan real estate market. However, there are a few important things to consider before you decide to rent out your home in Michigan



This guide will provide helpful information on how to rent your home in Michigan, what you need to do to get started, and the most important legal issues to consider.

How to Get Started

Before you start renting out your home, it’s important to make sure that you are properly registered and certified in the state of Michigan. 



You must apply for a rental license from the Michigan Department of Licensing and Regulatory Affairs (LARA). You will also need to obtain a landlord certificate from your county clerk’s office. In addition, you may need to obtain additional local permits or licenses in order to rent out your home in certain cities.

Legal Considerations

Once you are registered, you must familiarize yourself with the laws and regulations regarding renting out a home in Michigan and any local ordinances that may apply to you. Here are five of those regulations to keep in mind when renting out your home: 

1. Michigan’s Landlord and Tenant Act

This act outlines the rights and responsibilities of both landlords and tenants in Michigan. It covers topics like rent prices and increases, security deposits, security systems, the return of a tenant’s security deposit, insurance requirements for landlords, repairs and maintenance duties of both parties, eviction procedures, tenant-landlord communication, and other important topics. 

2. Lead Paint Disclosure Notice

Landlords must provide tenants with an EPA-approved pamphlet detailing lead paint safety at the start of the lease. Landlords are also required to disclose any known lead paint hazards on properties built before 1978 and must provide tenants with a copy of the results from any inspection or testing conducted for lead-based paints.

3. Habitability 

Landlords are responsible for providing accommodations that meet basic habitability standards, such as being structurally sound, free from vermin, and having working plumbing, heating, and electrical systems.

4. Security Deposit Limits

Landlords in Michigan may not charge more than one month’s rent for a security deposit. In addition, the deposit must be returned to the tenant within 30 days of their move-out date unless the landlord has specified in writing that they need more time to make repairs or clean the property. 

5. Rental Agreement Requirements

Landlords must provide tenants with a written rental agreement that outlines the terms of their tenancy, such as rent payment and due dates, rules for common areas, and expected behavior while living on the property.

By familiarizing yourself with Michigan landlord-tenant law and staying compliant with local regulations, you can ensure that you provide a safe, comfortable environment for your tenants. Furthermore, these laws help protect the rights of both landlords and tenants alike.

Tax Considerations

Renting out your home in Michigan can have a number of tax implications. The Internal Revenue Service (IRS) considers rental income taxable, and you may need to pay taxes on the income you earn from renting out your property. 

In Michigan, a registered landlord who leases tangible personal property can either pay a 6% Michigan tax on the purchase of the property or collect a 6% use tax on the rental income received and submit it to the government.

In addition, landlords in Michigan may be eligible for certain deductions that can lower their tax burden. These deductions include real estate taxes paid, any improvements made to the property that increase its value, advertising costs related to finding tenants, as well as insurance premiums, and repair or maintenance expenses. 



Depending on how much you collect in rent each year and what deductions you are eligible for, it’s important to consult with an accountant or qualified tax professional before filing your annual return. They will be able to provide more tailored advice based on your unique situation and help you maximize your deductions.

Safety and Maintenance

Safety and maintenance should always be a top priority when renting your home in Michigan. Landlords are responsible for ensuring the rental property is safe and habitable, which includes completing necessary repairs and regularly inspecting the residence to ensure it meets local safety regulations. 

Michigan landlords must also include smoke detectors in all units of their rental properties and keep them in working order throughout the duration of the tenancy. Tenants should also be provided with written instructions on where to turn off the water, gas, and electricity in case of an emergency. 



Additionally, landlords must disclose any prior lead exposure in their rental units. HUD requires all landlords in Michigan to provide tenants with a disclosure form outlining any past or present lead-based paint inspections or testing conducted for the property. This is crucial for rental units built prior to 1978 when lead paint was used in many homes.

Finding the Right Tenants for Your Home in Michigan

When it comes to finding tenants in Michigan, there are a few different ways that you can go about doing this. Here are a few strategies to consider:

• Use Online Listings – Platforms like Craigslist and Zillow can be great tools for finding tenants. You can ensure that your listing is advertised in the right areas and screen applications easily by having potential renters fill out an online application form. 
• Work with Realtors – A real estate agent can be a great asset in finding tenants and managing the rental process. They may have access to qualified renters and will be able to help you navigate any legal issues that may arise during the process. 
• Utilize Social Networks – Don’t forget about your social networks! Letting friends, family, and acquaintances know that you are renting your property can be a great way to find tenants. You may even save some money on advertising costs by using this method. 
• Conduct Open Houses: Open houses are an effective way to showcase your property and allow potential tenants to get a look for themselves before committing to a rental agreement. 
• Ask for Feedback: When renting out your home, ask for feedback from previous tenants about their experience living in your home so you can use this information when selecting new tenants. 
• Set Realistic Expectations: Potential renters should have a good understanding of what they’re getting into when renting from you, so make sure that you set clear expectations upfront regarding matters such as lease terms, rent payment schedules, and any other essential details related to the rental agreement.
  

Tenant Screening

Setting the Right Price

Setting the right price for your rental property is one of the most important steps in becoming a successful landlord. Too high of a price can result in fewer tenants, while too low of a price could mean losing money on your investment. 

When setting your rental rate, consider the size and condition of your property and the local rental market. You should also factor in any additional costs, such as taxes, insurance, and maintenance fees. Knowing how much comparable rentals are charging in your area can help determine an appropriate rate for your property. 



It’s also important to keep up with changing rental trends and update your prices accordingly. You can use online tools such as Rentometer to help you stay informed of the latest market rates and adjust your rental rate accordingly.

Collecting Rent in Michigan

As a landlord in Michigan, you have several options for collecting rent from tenants. For instance, many landlords prefer the convenience of online payments and may set up automatic deposits into their bank account on predetermined dates each month.

Other popular methods include mailing out physical checks or using services like PayPal and Venmo. In addition, you may also choose to include payment processing fees in your rent and allow tenants to pay with debit or credit cards. 



Regardless of your option, be sure to document any payments received in writing and keep detailed records of each tenant’s rental history. This will help you stay organized and ensure all payments are accounted for at tax time.

Having Questions? Contact Oakland Insurance Today!

At Oakland Insurance, we understand how important it is to ensure your rental property is properly managed and maintained. We can help you navigate Michigan’s landlord-tenant laws and provide the support you need to keep your rental business running smoothly. 



Don’t wait — contact us today for more information about rental insurance in Michigan. No matter what type of rental property you own — a single-family home, duplex, triplex, multiplex, or apartment complex — we can help you get the coverage you need.