Becoming a landlord for the first time is exciting and a little scary. You’ve gone through the difficult and sometimes daunting process of purchasing an investment property. But what next?
When you’re first looking for a tenant, it’s normal to feel a little anxious or overwhelmed. However, with the right tools, becoming a landlord can be a smooth transition.
In this first-time landlord checklist, you’ll discover nine essential steps that can give you the confidence to become the landlord you want to be and help you achieve financial independence.
First time landlord checklist
As a first-time landlord, you’ll want to use this checklist to set yourself up for success. This guide will help you take the right steps throughout the process of becoming a landlord for the first time.
1. Prepare property
Before tenants can move in, you need to prepare your rental property to make it attractive. This means cleaning, repairing and beautifying the interior and exterior of your rental property. The more attractive your home is to potential renters, the shorter it will stay on the market.
At home, you’ll need to clean carpets, paint or refinish walls, wash windows and sills, check appliances are functioning properly and clean, and wash or replace curtains. Make sure faucets are tight and sinks and bathtubs are free of cracks and damage. When potential tenants view your property, you want it to feel fresh and odor-free.
You’ll also want to increase curb appeal by decorating the exterior of your property. Mow the lawn, trim branches, remove weeds, and maybe even plant some flowers to make the rental unit look like a home. If the outside of your house is dirty, you should pressure wash it. If the house has gutters or a chimney, these may also need cleaning.
Making these improvements will attract more tenants to your property.
2. Determine the rental price
Once you have your property ready, you can determine the rental price. The amount of rent you charge depends on a variety of factors, including:
- Rental unit facilities and area
- property location
- Rental prices for similar units in the area
- Number of bedrooms and bathrooms in the unit
- Tenant parking arrangements
To determine the rental price for your property, you need to know what the minimum amount you are willing to accept is. In other words, how much rent do you need to charge to cover your expenses? Setting the rent lower than this will cost you, so make sure you know the minimum rent.
You’ll also want to check comparisons in the area to see what other landlords are charging, but make sure you’re using a unit with similar square footage, bedrooms, bathrooms, and amenities to get a more accurate estimate. While your rental property can charge slightly more or less than your competitors, you need to keep your prices competitive with other properties in the area to avoid occupancy issues.
3. Buy landlord insurance
Hopefully you have an insurance agent who can help you understand landlord insurance for your rental property. Landlord insurance is essential to protecting your finances. It can help you pay if someone damages your rental property or is injured and needs medical attention.
As with most policies, when you purchase a landlord insurance policy, you have a choice of coverage options. Make sure you understand exactly what your policy covers so there are no surprises when you need to make a claim.
You can choose a deductible for your policy that works for you, but remember, the lower your deductible you set, the more you’ll pay each month. Having the right insurance can protect your assets.
4. Establish a lease agreement
A lease agreement is a legal document that defines the terms of the relationship between a landlord and tenant. You will need to create a lease agreement for your rental property that you and your tenants can sign. It’s a good idea to have an attorney review your lease contract to ensure you’re protecting yourself while complying with all state and federal guidelines.
Your rental agreement should include the following information:
- Rent amount
- When rent is due
- How tenants pay rent
- The amount of the margin and how to use it
- When does the lease start and end?
- How do you handle repairs and maintenance on your property?
- Your policies on access to the property, pets, smoking and use of the property
5. List your property and start marketing
Once your property is ready for tenants and insured, it’s time to let people know it’s available. Today’s renters expect to find your property listing online, so familiarize yourself with what that means and how to make it happen. Check out similar property listings and use them as a guide.
Post professional photos and videos of your unit online to give curious renters the opportunity to conveniently view your unit on their own time. If they like what they see, they’ll make an appointment to see the unit in person.
Of course, just having cute pictures and an interesting description aren’t enough to sell your rental property to someone. You have to market your product to the right audience. To do this, you need to understand your rental property’s target market, where they are looking for rental properties, and what they want in a home.
Use social media as a tool to promote your rental property to people in the area. Facebook and Instagram make it easy to post photos with engaging descriptions. This can be a great way to reach a large audience.
6. Screen potential tenants
Now that your property is online, you will generate some interest and start receiving applications and requests. It is important to screen potential tenants before renting your property to them. This reduces the chance of you having serious problems with your tenants.
Begin by familiarizing yourself with fair housing laws to ensure you comply with them. Use a rental app to learn about a potential tenant’s income, rental history, and personal details like name, phone number, and employer.
In the application, you can ask potential tenants to agree to a credit and background check. This information will tell you whether the tenant pays his bills on time or has a criminal record. You can also ask for references who you will need to contact to find out who you may trust to manage your property.
It’s also a good idea to meet potential tenants in person. It gives you the opportunity to discuss the terms of your tenancy agreement face to face so that you can ensure they understand your expectations. They can also ask questions and inspect the property to make sure it meets their needs.
7. Ready to move in
Once you find the right tenants, you’re ready to move them in.
Before your tenants move in, you’ll need to collect the first and last month’s rent (if applicable in your state) and a security deposit. You may need to reiterate the scope of the security deposit and what steps they must take to get it back upon moving.
Before a new tenant moves in, make sure the property is clean and safe. For example, does the appliance include a washer and dryer or a dishwasher? It’s important to keep a record of what’s there so you know what the tenant should have when they move out.
Give the tenant a tour of the property before handing them the keys. Show them any quirks the property may have that need their attention, or any wear and tear you’d like them to know about. Make note of any damages or issues they point out so you can deal with or ignore them at the end of the lease.
8. Set rent collection
You should know how your tenants plan to pay their rent. Let them know what your expectations are and how you want your rent to be collected each month. Do you want them to pay online or mail you a check? What do you do if they can’t pay online?
It may be easier for first-time landlords to collect rent from a single tenant, but if you want to add more rental properties to your portfolio, make a long-term plan. Standardizing your rent collection methods early on will make it easier for you to work with more tenants in the future.
9. Ongoing maintenance plan
Just like the home you live in, your rental property requires ongoing maintenance. The best way to stay on top of property maintenance is to have a property management checklist that tells you what needs to be done and when.
Your list will depend on the property, its condition and amenities, but should include details of the daily, weekly, monthly and annual care your home needs. By continuing to maintain your property, you can ensure that it remains a desirable rental unit for years to come.
final thoughts
Becoming a first-time landlord isn’t easy, but with this first-time landlord checklist, you can learn about the nine essential steps you need to take to help you achieve your goals. Once you hand over the keys to the first tenant, you’ll gain confidence so you can repeat the process as many times as you like.
Congratulations on becoming a first-time host.
Save time and money with this refreshing guide to managing your own property.
exist self-managed landlordAmelia McGee and Grace Gudenkauf share tips for efficient property management, tenant screening and onboarding, and scaling your business, all to help you escape the 9-to-5 drudgery and create lasting wealth through real estate.
Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
