7-Step Landlord Checklist for Renting Out a Property
Being a landlord, especially if itâs your first time, can be difficult. There are many things that you need to keep track of, as well as regulations you need to understand and abide by. To make the process easier, weâve put together a 7-step landlord checklist for you to follow.
Table of Contents
- Confirm you have permission to rent out the property
- Conduct safety measures and inspections
- Get landlord insurance
- Create a lease agreement
- Do a background check on your tenant
- Collect the security deposit and first rent payment
- Go over the move-in checklist with your tenant
1. Confirm you have permission to rent out the property
Owning a property doesnât automatically mean youâre legally permitted to rent it. For instance, if you have a standard residential mortgage instead of a buy-to-let mortgage, youâre not allowed to rent out your property without getting âconsent to letâ (i.e., without getting your lenderâs approval). This is because residential mortgages arenât designed for business use. [CITATION]
Additionally, just like any business owner, youâre required to obtain specific licenses for your rentals and register your properties to become a landlord. Some cities have much more stringent regulations than others, so make sure you understand the local laws.
Types of property management licenses
Check out the two common property management licenses below: [CITATION]
- Certificate of occupancy: This certificate is a legal document that protects prospective tenants by stating that a property is safe to live in. To get a certificate of occupancy, contact your local building or zoning regulatory authorities or check your local governmentâs website for the documents you need to file.
- Housing business license: This type of license is typically required for each rental unit. You can file for it after youâve obtained your certificate of occupancy. The paperwork required to apply for this license varies depending on the type of property youâre renting and your state. Search your state government website to see if you can find the appropriate forms.
Failure to obtain the required licenses can have serious consequences. You might face hefty fines, and if you ever have to evict a tenant, you might not have the right to do so since you didnât comply with the laws. A more dire consequence is that the government might shut down your rental business altogether.
When you obtain your licenses, take some time to read the other laws that govern landlord-tenant relationships. In particular, pay attention to the Fair Housing Act, which explicitly bars landlords from making decisions based on their tenantsâ race, skin color, religion, sex, national origin, disability, or familial status. Make sure to familiarize yourself with this law so that you donât inadvertently violate it (which can happen even if you donât intend to).
2. Conduct safety measures and inspections
Two of the most important landlord preventative maintenance inspections to conduct before renting out a property are gas and electricity checks, which you should perform every 1â2 years. In addition, your property shouldnât have any vermin or rodent infestations, or any environmental contaminants, such as mold, lead, or asbestos.
Check all of the following to make sure theyâre clean and in working order:
- HVAC (heating, ventilation, and air conditioning systems)
- Hot water heating systems
- Plumbing
- Elevators
- Ventilation
- The infrastructure of the building (walls, roof, stairs, floors, etc.)
Note that these inspections arenât a one-time thing. After youâve rented out your unit, youâll still need to carry them out annually, quarterly, or even monthly, depending on the state of the property. If youâre unsure what to look out for, you can print out a free rental inspection checklist to start the process.
Even if your property doesnât have any damage that needs fixing, itâs a good idea to thoroughly clean up the place before potential tenants see it.
Before you rent the unit out, you should also turn over the locks if there were people living on the property before the new tenant. This is a safety precaution that will also protect you from legal liability.
3. Get landlord insurance
Itâs important to realize that homeowners insurance only covers damage to homes that are occupied by their actual owners. To protect yourself from legal liability (lawsuits) or financial loss due to property damage, you should consider getting landlord insurance.
Keep in mind that landlord insurance doesnât cover your tenantsâ possessions if theyâre stolen or damaged, which is why renters insurance is important for your tenants to have as well. Tenants arenât legally required to get renters insurance, but some landlords all renters to buy policies. You can consider implementing a requirement like this as well.
4. Create a lease agreement
Creating a proper lease agreement in writing provides clarity and protects both landlords and tenants from lawsuits.
Different states have different laws about rental agreements, so take some time to research state-specific laws on leases to make sure youâre creating an enforceable contract. (You can also just download lease agreements tailored to your state from that resource guide if youâd rather skip the hassle.)
If you want to create your lease agreement yourself, be sure to include these ten crucial items in it:
- Landlordâs and tenantâs contact information
- Type of lease and length of the term
- The propertyâs address, square footage, and amenities
- The amount, frequency, and late penalties of the rent payments
- The amount of the deposit and state-specific regulations for returning it
- Options to purchase the property or renew the lease
- Furnished or unfurnished
- Home-based business regulations
- Pet policies
- Guarantor appointment
If you and your tenant both agree to add new rental conditions to the lease, then youâll have to create a lease addendum to ensure that the new agreements are legally binding.
Consider creating an electronic lease agreement
The Electronic Signatures in Global and National Commerce Act (E-Sign Act) ensures the validity of electronic signatures on contracts, including leases. This means that digital and electronic lease signing holds the same weight as signing with a pen. Doing so creates less paperwork, saving both time and money.
5. Do a background check on your tenant
To do a background check on your tenant, youâll at least need their full name, date of birth, current address, and Social Security number.
Also consider asking for the following information:
- Previous addresses
- Driverâs license number
- Landlord reference letters
- Current income and employment status
- Permission to conduct a credit check
If you conduct a credit check on your tenant, youâll get an overview of the information in their credit report, which will allow you to assess how likely it is that theyâll be able to afford their rent and pay it on time.
In addition to pulling your tenantsâ credit reports, you should also pay close attention to whether they have any past evictions, legal restrictions on where they can live, or criminal offenses.
If you decide to use a tenant screening company to help you complete your background check, look up their reviews beforehand to make sure that theyâre reputable and that they comply with the Fair Credit Reporting Act (FCRA).
6. Collect the security deposit and first rent payment
Once your tenant has signed the lease, itâs time to collect their deposit and initial rent payment(s). Check out your stateâs laws regarding how to handle security deposits, as the regulations on this vary in each state.
Should you ask for the first and last monthâs rent?
Most tenants are prepared to pay the deposit and the first monthâs rent, but should you charge the last monthâs rent as well? There isnât a right answer to this question, as there are both advantages and disadvantages to it.
Collecting the last monthâs rent may screen out unreliable tenants and protect you financially. However, since your tenants will have to pay more money upfront, your pool of applicants will also be smaller and it may take longer to find someone to rent the unit. Whichever decision you make is fine as long as you carefully consider it first.
When it comes to actually collecting the rent, remember that you have other options besides requesting a paper check. Thereâs also the option of using online rent collection, which can make it easier to keep track of your tenantâs payments. To make it even smoother, consider using a rental property management platform to automate rent, deposits, reminders, and payment trackingâall in one dashboard.
7. Go over the move-in checklist with your tenant
When your tenant finally moves in, prepare a checklist and go over it with them. The move-in checklist should describe the current condition of the property, serving as proof that the place is safe, clean, and habitable.
Include these items in the checklist:
- The tenantâs name, apartment number, and address
- The move-in date and move-out date
- Proof that all the safety devices (smoke detectors, etc) work
- The results of the move-in inspection
- The tenantâs signature, your signature, and the date
Itâs a good idea to ask if your tenant has any special requests, such as a disability accommodation request. If the request is based on wants instead of needs, such as repainting the wall, youâre not obliged to follow through. Lastly, remember always to leave your contact information with your tenant in case of emergency.
Takeaway: Itâs important to document the condition of the property and the rights of both the tenant and the landlord before renting a house.
- To become a landlord, get the necessary licenses and insurance and obtain consent to let from your lender if you have a residential mortgage.
- Inspect, clean, and fix your property to make it safe and habitable before finding a tenant.
- Make sure to also prepare all the proper documents, such as lease agreements and move-in checklists. These will protect you if you have any disputes with your tenants in the future.
- Pick out a good tenant that doesnât have a criminal record and can pay their rent on time by running a background check on them.
- Collect the deposit and the first and/or last month’s rent before your tenant moves in.