Becoming a landlord for the first time is exciting and a little scary. You’ve gone through the difficult and sometimes arduous process of buying an investment property. But what next?
Feeling a little anxious or overwhelmed is normal when you’re looking to take on tenants for the first time. However, with the right tools, easing into being 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 you need to become the landlord you want to be to help you gain financial independence.
The 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 your journey to becoming a landlord for the first time.
1. Prepare the property
Before tenants can move in, you’ll need to prepare your rental property by making it appealing. This means cleaning, repairing, and beautifying the interior and exterior of the rental property. The more attractive you make the home to potential renters, the less time it sits on the market.
Inside the home, you’ll want to clean the carpets, paint or touch up walls, wash the windows and window sills, check that appliances function and are clean, and wash or replace window coverings. Ensure faucets don’t leak and sinks and bathtubs are free of cracks and damage. When a potential tenant looks at your property, you want it to feel fresh and be free of odors.
You’ll also need to add curb appeal by sprucing up around the outside of the property. Mow the lawn, trim tree limbs, remove weeds, and maybe even plant some flowers to make the rental unit look like a home. If the outside of the house is dirty, you should pressure wash it. If the house has gutters or a chimney, these may need to be cleaned as well.
Making these improvements will attract more tenants to your property.
2. Determine rent price
When you finish preparing the property, you can determine the rent price. The amount you charge for rent will depend on several things, including:
- The amenities and square footage of the rental unit
- The location of the property
- The rent price for comparable units in the area
- The number of bedrooms and bathrooms in the unit
- The parking arrangement for tenants
To determine the rent price for your property, you need to know what the minimum amount you can accept is. In other words, how much rent do you need to charge to cover your expenses? Setting your rent lower than this will cost you, so make sure you know your minimum.
You’ll also need to look at comps in the area to see what other landlords are charging, but make sure you use units with similar square footage, bedrooms, bathrooms, and amenities to get a more accurate estimate. While you can charge slightly more or less for your rental property than competitors, you’ll want to keep your rate competitive with other properties in the area to avoid issues with occupancy rates.
3. Obtain landlord insurance
Hopefully, you have an insurance agent who can help you understand landlord insurance for your rental property. Landlord insurance is crucial to protecting your finances. It can help with costs if someone damages your rental property or gets injured and requires medical care.
As with most insurance policies, you’ll have options for coverage when you take out a landlord insurance policy. Make sure you know exactly what your policy covers, so there aren’t any unexpected surprises if you need to make a claim.
You can choose a deductible for your policy that works for you, but keep in mind that the lower you set your deductible, the more you pay each month. Having the right insurance coverage can protect your assets.
4. Create a lease agreement
A lease agreement is a legal document that defines the terms of a relationship between a landlord and tenant. You’ll need to create a lease agreement for your rental property that you and your tenant can sign. It’s a good idea to have a lawyer look at your lease contract to ensure you’re protecting yourself while following all state and federal guidelines.
Your lease agreement should contain information such as:
- The rent amount
- When the rent is due
- How tenants can pay the rent
- The security deposit amount, and how it can be used
- When the lease begins and ends
- How you handle repairs and maintenance for the property
- Your policies for entering the property, pets, smoking, and use of the property
5. List your property and start marketing
With your property ready for tenants and properly 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 this means and how to make it happen. Look at similar property listings and use them as a guide.
Posting professional photos and videos of your unit online gives curious renters a chance to view your unit conveniently on their own time. If they like what they see, they’ll make an appointment to tour the unit in person.
Of course, just having cute pictures and a fun description won’t be enough to sell someone on your rental property. You must market your unit to the right audience. To do this, you need to understand the target market for your rental property, where they search for properties to rent, and what they look for in a home.
Take advantage of social media as a tool to advertise your rental property to people in the area. Facebook and Instagram let you easily post pictures with an engaging description. This can be a great way to reach a massive audience.
6. Screen potential tenants
Now that your property’s live, you’ll generate some interest and start getting applications and requests. It’s important to screen potential tenants before you rent your property to them. This reduces your chance of having serious issues with your tenants.
Familiarize yourself with fair housing laws first to ensure you follow them. Use the rental application to learn about the potential renter’s income, rental history, and personal details like their name, phone number, and employer.
In the application, you can ask the potential tenant to consent to a credit and background check. With this information, you’ll gain an understanding of whether the tenant pays their bills on time or has a criminal record. You can also ask for references, which you need to contact to get a feel for the person you might trust with your property.
Meeting the potential renter in person is also an excellent idea. It gives you an opportunity to discuss the terms of the rental agreement face to face so you can be sure they know your expectations. They can also ask questions and look over the property to make sure it meets their needs.
7. Prepare for move-in
When you find the right tenant, you can prepare for them to move in. You should already have the lease agreement ready and signed.
Before your tenant moves in, you’ll want to collect the first and last month’s rent, if applicable in your state, and security deposit. You may want to reiterate what the security deposit covers and what they must do to get it back when they move.
Make sure the property is clean and safe before your new tenant moves in. Take an inventory of what’s on the property and in the home. For example, does the unit include a washer and dryer or dishwasher? It’s important to document what’s there so you know what you should have when the tenant moves out.
Take the tenant on a walk-through of the property prior to handing them the keys. Show them any quirks the property may have that they need to be aware of, or any wear and tear you want them to know about. Make note of any damage or issues they point out so you can take care of them or disregard them at the end of the lease.
8. Set up rent collection
You should know how your tenant plans to pay their rent. Let them know what your expectations are and how you’d like to collect the rent each month. Do you want them to pay online or mail you a check? What will you do if they can’t pay online?
A first time landlord may have an easier time collecting rent from a single tenant, but make a plan for the long term if you want to add more rental properties to your portfolio. Standardizing your rent collection method early can make it easy to work with more tenants in the future.
9. Plan for ongoing maintenance
Just like the home you live in, your rental property will require ongoing maintenance. The best way to stay on top of property maintenance is to have a property management checklist that tells you what you need to do and when.
Your checklist will depend on the property, its condition, and its amenities, but should include details for the care the home needs daily, weekly, monthly, and yearly. By consistently maintaining 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 have the nine essential steps you need to help you reach your goal. Once you’ve handed over the keys to your first tenant, you’ll gain confidence so you can repeat the process as many times as you want.
Congratulations on becoming a first time landlord.
Save time and money with this refreshing guide to managing your own properties.
In The Self-Managing Landlord, Amelia McGee and Grace Gudenkauf share the secrets of efficient property management, tenant screening and onboarding, and scaling your business—all to help you break free from the 9-to-5 grind and create lasting wealth through real estate.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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