Landlord Checklist for Leasing Your First Property
August 14, 2023
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What Do You Need to Know When Leasing Your First Property?
Are you a burgeoning real estate investor? Ready to put that property you inherited to work? Or are you simply considering renting your house out for the first time?
As a new landlord, there are lots of new skills to learn and systems to navigate. Having a list of responsibilities can help you stay organized and on-task while you set up your very first rental property.
Checklist for Landlords
If you’re in this boat, we’ve made this checklist for landlords you can use, whether you’re renting your house out or setting up your first investment property. Read on to learn more about each step.
- Get your property inspected.
- Contract out any repairs or cleaning.
- Check zoning laws and city requirements.
- Purchase landlord insurance.
- Review your state’s landlord-tenant laws.
- Draft your lease agreement.
- Screen tenants.
- Collect security deposits and first month’s rent.
- Set up online rent collection.
- Move in your first tenants.
Get Your Property Inspected
All residential units are required to meet health, safety, and building codes. These rules help keep living spaces in habitable condition by ensuring that your property has:
- Safe and proper electrical wiring
- All essential services, like heat, running water, and sufficient hot water
- The appropriate amount of space for the number of occupants
- Working smoke and carbon monoxide detectors
- Stable infrastructure and foundation
- No pest infestations or environmental hazards, like mold
Before you can rent out your house, make sure to get inspections of the following systems:
- HVAC system
- Hot water heating
- Infrastructure (walls, roof, ceilings, etc.)
Paying for these inspections may be expensive, especially since you need to continue to get inspections annually or quarterly. However, identifying any dangerous hazards to your tenants and avoiding future liability is always worth the cost up front.
Contract Out Any Repairs or Cleaning
Unless you yourself are a professional, you should always hire someone who is to perform home maintenance. Many homes being prepared for tenants need:
- Electrical repair
- New appliances
- Pest removal
- Sewer line blockage removal
- Cabinet treatment or replacement for mold or water damage
Likewise, depending on the current condition of your property, it probably needs a thorough deep cleaning. You can do this yourself, but if you have cash to spare, hiring a professional cleaning company is the better choice. Professional cleaners will almost always do a better job than you can, plus they can bring necessary equipment like carpet cleaners and janitorial supplies.
Check Zoning Laws and City Requirements
Just because you own a property, it doesn’t necessarily mean you can start renting it out to tenants immediately. First, you’ll need to check with your local, regional, and city requirements to determine the zoning status of the land. You may need permission from the city to use your property for residential leasing, especially if it hasn’t been used for that purpose before.
Purchase Landlord Insurance
Landlord insurance is different than homeowner’s or renter’s insurance. As a landlord, you need a separate policy to protect you and cover damages in the case of:
- Property damage by a tenant
- Natural disasters
- Legal liability
- Other financial loss
Remember that your new tenants will still need their own renter’s insurance policies to cover damage to their personal liabilities and belongings.
Review Your State’s Landlord-Tenant Laws
Understanding rental laws in your state is a critical responsibility of being a landlord. If you aren’t familiar with the legal regulations that govern leasing where you live, you could unknowingly violate the law and cause yourself serious financial and legal repercussions.
State laws often dictate the following:
- When and how much you can increase rent
- How much you can charge for late fees
- Whether there’s a mandatory grace period in your state and how many days it is
- Limits on rental application fees
- How you should handle credit, criminal, and eviction reports
- When and how you can enter a unit
- Which fair housing protections the state has
- How much you can charge for a security deposit
- Where you should keep deposits and whether interest accrues on them
- How quickly you must return deposits after a tenant moves out
- Certain notices you must include in leases
Read more about the landlord tenant laws in your state here.
Draft Your Lease Agreement
Every tenancy needs a strong lease or rental agreement. Although it’s possible to rent to a tenant with an oral agreement only, we recommend always drafting up and signing a written copy with your tenant. Written leases cover more liability, help you establish firm rules, and serve as a reference guide should anything come into question during the tenancy. They can also help you evict a tenant more quickly should any serious problems occur.
Since leases can be long and complex, there are many state-specific lease templates and addenda you can download online. At minimum, your written lease should include:
- Both parties’ names
- The start and end dates of the lease
- The address of the property and a description of any additional areas it includes (e.g., yard space, garages, sheds, carport, etc.)
- The monthly rental amount
- The security deposit amount
- A list of the amenities, appliances, and utilities included in the rent
- Which responsibilities the tenant has
- The late fee and grace period policies
- Guest and pet policies
- Early termination policy
- Subletting/subleasing policy
- Any other property rules and lease conditions
Tenant screening is a critical responsibility that could have enormous effects on your rental business. Accepting a bad tenant or improperly screening a tenant can lead to late rent payments, financial distress, legal issues, and even police involvement at your community if the tenant engages in illegal activity on the premises.
All tenants should undergo credit, criminal, and eviction history checks, following the guidelines and restrictions determined by your state’s legislation. It’s also common to ask for proof of income, employee references, and prior landlord references. Be sure to do your research on all potential tenants before inviting them to rent from you.
Collect Security Deposits and First Month’s Rent
The security deposit provides you with guaranteed funds should the tenant fail to uphold their end of the lease. You can use deposit funds to pay for unpaid rent or fees and property damages beyond reasonable wear and tear at the end of the lease term. However, each state has specific procedures for the collection and storage of security deposits, so be sure you know how to treat the funds your tenant provides.
You should also collect the first month’s rent ahead of your tenant’s move-in date. If your tenant doesn’t move in on the first of the month, you can learn how to prorate their rent following our guide here.
Set Up Online Rent Collection
Last but not least, you need an established, preferably automated, method for collecting rent. Whether you’re renting out a multi-family complex or simply renting out house rooms within a single property, online rent collection is the best method. We won’t get into all the benefits here, but setting up rent collection with a property management software company like Innago can save you time, money, and effort on the first of each month.
With the help of this checklist, you’ll be ready to sign leases with your first tenants in no time! Above all, be sure you keep detailed records of both your property and your tenants. Staying organized and complaint with the law will always give you a leg up when starting out as a first-time investor.