From Primary Residence to Rental: A Step-by-Step Guide for Homeowners

Are you thinking about renting out your San Diego home? 

Moving out of your primary residence puts you in a unique position. With property values among the highest in the country and a strong demand for rentals driven by the city’s thriving job market, coastal lifestyle, and limited housing supply, turning your primary residence into a rental can be a smart financial move. 

You might find yourself upgrading to a new home or even downsizing. Perhaps you are relocating or simply exploring passive income. Whatever your motivation, converting your home into a rental property is a potentially profitable move that requires thoughtful planning and compliance with local regulations.

Here is a look at the steps required for turning a primary residence into a rental.

Our Summary: Know where you stand financially and create investment goals. Understand legal compliance requirements. Prepare the property for residents. Update insurance. Establish a competitive and profitable rental value. Partner with a professional property manager.  Place a reliable and qualified resident.

Step 1: Evaluate Your Financial and Personal Goals

What are your reasons for renting out your home? Are you looking to build long-term wealth, cover your mortgage, or generate short-term cash flow? Your motivation will influence how you structure your rental strategy. Consider the potential for rental income. You should know your property’s fair market rent, and once you have that, you can compare it to your expected costs such as mortgage, taxes, insurance, maintenance, and potential HOA fees.

Consult your tax experts. Rental income is taxable, but you can deduct expenses like repairs, depreciation, property management fees, and mortgage interest. There also may be capital gains taxes. If you plan to sell in the future, understand how converting your home to a rental may affect future taxes. 

Step 2: Review Legal Requirements

San Diego has specific regulations for rental properties, and it’s essential to ensure compliance before listing your home.

Key local requirements include:

• Business tax certificate. All rental property owners in the City of San Diego must obtain a Business Tax Certificate, even for a single rental unit.
• Short-term vs. long-term rental laws. If you plan to rent your property for fewer than 30 days at a time, different rules apply under San Diego’s Short-Term Residential Occupancy (STRO) ordinance. For traditional long-term rentals (30+ days), these do not apply.
• Housing standards. Your property must meet local health, safety, and habitability codes. Smoke detectors, carbon monoxide alarms, and proper locks are mandatory.
• HOA and lease restrictions. If your property is part of a homeowners association, check whether rentals are permitted and under what conditions.

It’s also wise to familiarize yourself with California landlord-tenant laws, such as required disclosures, rent control limitations, and eviction procedures under the California Tenant Protection Act (AB 1482). As experts in San Diego property management, we can help with this and ensure all compliance requirements are met.

Step 3: Prepare Your Property for Residents

A home lived in as a primary residence often needs adjustments before being rented out. Residents expect clean, well-maintained spaces that feel move-in ready. Any rent-ready checklist should include: 

1. Declutter and depersonalize. Remove personal items, family photos, and excess furniture to create a neutral, inviting environment.
2. Address maintenance and repairs. Fix leaky faucets, broken tiles, or worn-out flooring. Preventative maintenance reduces future headaches.
3. Upgrade strategically. Simple improvements like new paint, modern light fixtures, or energy-efficient appliances can boost appeal without overspending.
4. Enhance curb appeal. In San Diego’s competitive rental market, exterior first impressions matter. Pay attention to landscaping, fresh paint, and tidy pathways.
5. Professional cleaning. A spotless home signals quality and sets the tone for how you expect it to be treated.

Consider a pre-rental inspection to uncover issues that could delay occupancy or lead to disputes later.

Step 4: Convert Your Homeowners Insurance to Landlord Insurance

One of the most overlooked steps in turning a primary home into a rental is updating insurance coverage. Your standard homeowners insurance policy is designed for owner-occupied properties. It doesn’t provide full protection once residents move in.

Switch to a landlord insurance policy (sometimes called dwelling policy or DP-3 coverage). This type of policy covers a rental home’s structure, liability protection for the owner, and any loss of rental income. 

Step 5: Determine Your Rental Rate

Pricing a rental correctly is crucial. The wrong price can either lead to a longer vacancy or an underwhelming ROI. Set the right rent with good data, which we can provide. Scan the market for competing properties. Determine what makes yours different from all the others. Qualified residents will pay more for fenced yards, energy-efficient appliances, and smart home technology.

Step 6: Partner with San Diego Property Managers 

It’s risky to manage a rental property on your own, especially if you do not have the tools and technology required to ensure consistency, compliance, and coordinated processes. The risk of legal mistakes is also high in this heavily regulated market. With the help of an experienced property management expert, you can expect your home to be protected and its value intact. We would be happy to tell you about our services and how we effectively lease, manage, and maintain your property. 

Step 7: Marketing and Tenant Placement

San Diego’s rental market moves quickly, and a profitable rental property needs a qualified renter. Placing residents starts with a sound marketing strategy. Use professional photos and create a listing that is attention-grabbing and unique. Utilize online rental platforms and social media when marketing. 

The law requires that applications are screened in the order they are received. Here are our screening best practices: 

• Establish qualified rental criteria and apply that criteria consistently to credit, background, and rental history.
• Verify employment and income. Aim for 2.5 to 3 times the rent as a benchmark.
• Contact previous landlords for references.
• Adhere to Fair Housing laws and never discriminate based on protected classes.

Converting your San Diego home from a primary residence into a rental property can be a rewarding financial move, offering steady income, tax advantages, and long-term appreciation. 

Rental demand in this growing market isn’t slowing down anytime soon, and we would be happy to help you turn your primary residence into a successful rental. Contact us at San Diego Residential Property Management.