<prompt> Human: After graduating from college, we ended up staying in the college town for a while and decided it was time to buy a house. After having the house for a year, both my wife and I received job offers that we could not refuse, essentially doubling our income. We accepted the jobs in our hometown and are currently living with my parents until the house sells. Its been a year; the house will not sell. So, we listed it for rent, and got a contract the next day...Ive never been in this position. How does this work as far as finances go? What precautions should I take? I dont want to pay more in taxes just to rent out this house. Someone has told me to create an LLC for the income that we receive, is that a good idea?What can I claim on taxes to help me not have to pay back so much? Ive searched on google and followed simple steps like getting the insurance adjusted accordingly to have tenants, gotten all the bills out of my name, things like that but I feel like Im missing something and dont want a big surprise come tax time. Any help is truly appreciated.  <response>: My experience - bought a townhome, took a job out of state, currently renting townhome out and have another mortgage on my primary home.I have been renting to the same tenant since June,2015. His lease is up in March 2018. He pays every month, there have been minor problems trash can left out front too many times but he paid the fines, etc.I use a property management company. They arent great, they take 8, and in my case, I believe they have a large investor portfolio or their own properties that they funnel the best tenants to first. But being out of state, I dont want my phone ringing in the middle of the night.First thing you need to do is screen your tenants. My property management company does that for me. The first edit: potential tenant was a convicted prostitute and had three teenage children that she did not list on the application. Check credit, criminal history, income, all that. No tenant is better than a bad tenant. Bad tenants dont pay, they ruin your house, and they are hard to get rid of. From there, the rent needs to cover the cost of carrying the property. Even if its only by 1 per year, you need positive cash flow on the thing. The main thing is make sure rent covers everything you need it to. Do some research on the expected life of appliances, hold some back in case you need to evict, and to cover months where no rent comes in. Even if you can keep it booked well in advance, there will be some turnaround time and whatever that can eat into your cash flow for a month or so in the best case.Its good to put eyes on the property every now and then if you can. Lots of people put tenant responsible for changing air filters and stuff like that in the lease, but tenants dont do it, and then what? Cant prove anything either way, and your HVAC suffers. Some stuff like that I pay for just for insurance.You need to make sure you have the correct insurance for the situation, you arent violating any HOA rules like to notify them or something and in my case the alarm company needed to be notified and set up with the tenant as a user.Financially, the rent you get will be added to your top line, less all the costs of maintaining the property. Repairs, interest, HOA dues, etc. is all deducted. Dont forget depreciation, I believe its a 27.5 year schedule for houses. This will change your cost basis when you sell.If you have losses and with depreciation you will possibly have paper losses that you dont need to resolve until you sell then your income will determine if you can deduct those against other forms of income. I usually am not able to if I recall correctly because my income is too high.This is all of the top of my head and based on my experience over the past 2 years. Being a landlord is full of pitfalls, and moreso because you bought a house to live in, couldnt sell it, and are now renting it - compared to having the opportunity to approach it as an investor. Professional help is often warranted in these situations, but most property management companies suck. Accountants and lawyers can save you many headaches.Edit: An LLC doesnt make a ton of sense. It costs some money to maintain that, and I would imagine the reason would be to shield the rest of your assets from liability should something happen with the property. But to get those benefits, I believe you need to transfer the ownership of the property to the LLC, which you cant do without the bank calling your loan due. 