First-Time Landlord Tips: Guide + Checklist

Being a landlord is no simple task, especially for anyone new to the game. From understanding rental laws to finding and screening prospective tenants, it can feel like the to-do list is nearly never-ending.

Luckily, we're here to help. We've put together this First-Time Landlord Tips: Guide + Checklist to give you all the information you'll need (and more) right here, in one place. Keep reading for all there is to know about becoming a landlord for the first time.

Understand Rental Laws

One of the first things you'll want to do as a landlord is make sure you understand all rental laws. There are both federal and state laws involving rental properties that are in place to protect both you as the landlord and your tenants.

Having a thorough understanding of your legal rights and obligations as a landlord will help you protect yourself and your property.

Federal Laws

Starting with the federal laws, there are two main pieces of legislation that are essential to know about as a landlord: the Fair Housing Act and the Fair Credit Reporting Act.

Fair Housing Act

Any individual engaging in housing-related activity, including renting, purchasing, or seeking housing assistance, is protected from discrimination under the Fair Housing Act. From a landlord's standpoint, the Fair Housing Act covers the leasing process and includes any form of advertising.

The Fair Housing Act prohibits discrimination based on any of the following:

• Race
• Color
• National origin
• Religion
• Sex
• Familial status
• Disability

Fair Credit Reporting Act

The Fair Credit Reporting Act explicitly details how you, as a landlord, can use a prospective tenant's credit history as a part of your screening process. According to the Fair Credit Reporting Act, you must:

• Get permission from the applicant to run a credit report
• Provide the applicant with information regarding the credit agency you will be using
• Explain to the application what findings from their credit report resulted in adverse action (if any)

State Laws

Unsurprisingly, state laws regarding rental properties will vary across the country, which is why it is essential to do your due diligence in finding out the details of your state as a landlord. State laws are typically more concerned about practical matters in the landlord-tenant relationship.

Some of the things you might see detailed in state laws may include:

• Rights and responsibilities of both landlords and tenants
• Terms of conditions of a lease agreement
• Guidelines for lease termination
• How to handle tenant evictions

Legal Responsibilities of a Landlord

In addition to federal and state-specific laws, you will need to do your homework to determine if your city has other landlord-tenant laws, as there are several of them. Some of the more common laws are about:

• Evictions
• Safety features
• Knowing criminal activity
• Abandoned tenant property
• A renter's right to privacy
• Security deposits
• Making repairs
• Providing a safe environment
• Required disclosures
• Lease documents
• Discrimination

Get Landlord Insurance

Your primary goal as a landlord is to protect your property to maintain its ability to generate income for you. As any homeowner knows, unexpected expenses can account for some serious financial troubles. Thankfully, landlord insurance can help you to minimize this threat.

What Is Landlord Insurance?

Landlord insurance is a specific form of insurance that helps cover financial losses in rental situations. The type of landlord insurance you want to be sure to seek out will cover your rental building, any units within it, as well as the contents inside.

What Is Covered Under Landlord Insurance?

Pre-approved emergencies and other mishaps are covered under landlord insurance. The details of what is covered should be explicitly listed in your insurance policy but may include things like:

• Mold
• Wind damage
• Snow and ice collapse
• Volcanoes
• Explosions
• Hail
• Water damage
• Falling objects
• Theft
• Vandalism
• Lightning
• Smoke damage
• Wind
• Fire

How Much Does Landlord Insurance Cost?

Landlord insurance is similar to traditional homeowners insurance in that the terms and costs can vary greatly depending on several different factors. One primary difference between the two forms of insurance is that landlord insurance typically costs 25% more than the standard home insurance policy.

In the United States, the annual average cost of landlord insurance is $1,481. The cost of landlord insurance should not stop you from getting the protection you need. If you are concerned about monthly expenses, check with your accountant to see if your premiums could be considered tax-deductible.

Create a Bookkeeping Process

Like any proper business, owning a rental property comes with specific bookkeeping duties that must be handled correctly.

It is crucial to have a process in place for your bookkeeping, as it will help you to:

• Understand your return on investment better
• Calculate tax-deductible expenses easier
• Prepare for IRS auditing

While it's crucial to find a process that makes the most sense for you, here are some tips for rental property landlords to consider.

Separate Your Personal and Business Accounts

Although it might seem easy enough to keep track of your personal and business expenses in one place, it's much simpler to separate the two from the beginning. Income and costs are hard enough to track, but adding multiple sources complicates things significantly.

Separating your personal and business accounts will also help set you up for the future if you plan to expand your rental property portfolio. Some state laws require landlords to hold security deposits in business accounts, so keep that in mind.

Create a System for Tracking Your Income and Expenses

Once your business account is set up, you'll want to figure out a system for tracking both your income and expenses. If you prefer to be more hands-on, you can opt for a system or worksheet of your own. Others opt for readily available accounting software. Whichever method you select, just make sure you choose one and know what to do so you can track everything from the get-go.

Pick the Accrual or Cash Accounting Method

While sorting out your tracking system, you'll want to determine whether you will record your income and expenses based on the accrual or cash accounting method. Whichever method you decide on is fine, just make sure you stay consistent with it.

Accrual Accounting Method

With the accrual accounting method, you can track income and expenses as they occur, regardless of when the cash is received or paid.

Cash Accounting Method

In the cash accounting method, you can track your income and expenses as they hit your account, not when the transaction occurs.

Learn How to Fill Out Your Tax Forms

Understanding how to fill out any applicable tax forms early on is a massive benefit to any landlord. W-9s and 1099s are the two that you will most likely have to deal with, though you should find out if there are any others in your particular situation.

Remember. you might need to submit these forms with your taxes, and failing to do so correctly could be incredibly costly.

Hire a Tax Professional

Regardless of how well you think you understand taxes for your business, it's always best to hire a tax professional. Hiring a certified public accounting (CPA) will help you stay up to date on laws and implement an effective accounting strategy.

Maintaining your relationship with this tax professional will help you better analyze your financial performance at the end of the year or whenever you see fit.

Plan for Taxes

Don't forget to declare any rental income on your taxes. Thankfully, you can also deduct expenses associated with maintaining your rental property as a landlord. Ultimately, filing for taxes as a landlord for the first time can be pretty complicated. Here's a look at some of the essential aspects you'll need to consider.

Declaring Income Taxes

Declaring your rental income taxes relies on the accounting method you choose, either the accrual or cash basis method.

Deducting Expenses

In addition to declaring your income, you can also deduct expenses, which can help minimize your tax liability from your rental property. Some of the tax deductions may include:

• Depreciation
• Repairs
• Operating expenses
• Property taxes
• Advertising vacancies
• Utilities
• Insurance
• Materials
• Supplies

How to Report Rental Income

Here is a list of some of the forms you might need when reporting rental income:

• Form 1040 (rental income)
• Schedule E: Supplemental Income and Loss (income, expenses, and depreciation)
• Form 4562 (detailed depreciation)

Set Your Business Hours

Creating business hours will help display your level of professionalism while helping you maintain your sanity. Letting your tenants know what days and hours you are available creates boundaries so they don’t reach out to you during inappropriate hours.

Explain to them that if there are emergencies, they should not hesitate to reach out. However, it is just as crucial to explain to them the expectations they should have in those circumstances.

Establish Relationships with Other Service People

As a landlord, you only have a matter of time before you'll need to reach out for services. This is even more important if you own multiple properties. Whether it be cleaning services or handymen, it's a good idea to have a list of service people readily available so that you can call them if anything comes up.

Create lasting relationships with service people, and they might be willing to provide services at discounted rates if you use them in multiple properties. Some of the service people you'll want to have ready might include:

• Cleaning service
• Handyman
• Electrician
• Plumber

Make Sure Your Property is Well Presentable

Before you have anyone come to look at your rental property, make sure it is well-prepared for any prospective tenants. How well your property shows will directly reflect upon how long it sits on the market before finding tenants.

Here is a brief checklist of some of the areas of your property you'll need to tend to in preparation for rental:

• Landscaping the front and back yards
• Eliminating any bad odors
• Ensuring all doors, windows, and gates have working locks
• Hiring a professional to check plumbing, electricity, and heating
• Cleaning each room thoroughly
• Upgrading fixtures and window treatments
• Cleaning flooring (replacing as needed)
• Painting the walls with a fresh coat
• Repairing any problems like holes, leaks, or pests
• Testing smoke and CO2 detectors
• Checking all appliances to make sure they are working properly

Create a Plan for Vacancies

Despite your best efforts, there may be instances in which your rental property is vacant, which can be costly. Have a plan in place to cover all your vacancy expenses.

To minimize the threat of vacancies, you can follow these steps as a landlord:

• Be mindful of when your leases are due
• Raise your rent gradually each year, rather than in one large sum
• Offer incentives to tenants who are unsure of renewing their lease
• Listen to tenant feedback
• Prioritize your landlord-tenant relationship

Find a Property Manager (Optional)

Being a landlord comes with many responsibilities, which is why many people seek out help from a property manager. Rather than dealing with the day-to-day landlord tasks, a property manager can take over these responsibilities for you.

A property manager can be an individual or a management company you hire to oversee your rental property and tenants. Some of the standard functions that a property manager will handle on your behalf include:

• Recordkeeping
• Move-in and move-out inspections
• Issuing notices
• Setting rental rates
• Advertising your property
• Enforcing rental rules and policies
• Paying bills
• Assisting with taxes
• Managing a budget
• Arranging for repairs, maintenance, and upkeep
• Collecting rent or fees
• Discussing leasing and property rules with prospective tenants
• Screening tenants
• Negotiating lease terms

Use Market Data to Determine Rent Prices

Figuring out your rental price comes down to a few different aspects. First, you’ll want to consider the monthly costs of running your property, such as your mortgage payment and HOA fees.

Next, you can use market data to determine your rent prices. Utilize helpful online tools like the Apartment List National Rent Report, which is released monthly to help figure out some trends for your area.

Lastly, decide whether you want to include utilities or not. To figure out what makes the most sense for your rental property, you can ask yourself these questions:

• If tenants paid for their utilities, would it impact their usage?
• Do other properties in the area include utilities in rent?
• Does the building split up utilities by units?
• Will charging utilities impact the demand on your rental property?

List Your Property on Apartment List

Once you have all the details figured out, it's time to get your rental property listed. It's crucial to find a resource that you trust, which is why you should list your property on Apartment List. At Apartment List, we help you improve how you market your property to find the right tenants right now.

How to List

Listing your property on Apartment List is as easy as following three simple steps.

#1 Set Your Price

Set a price right off the bat with Apartment List. We'll make sure that you never exceed this spend to keep you comfortable.

#2 Stay Flexible

We like to make sure you have the flexibility you want, which is why we don't force you to commit to any sort of contract. You can easily change the price of your listing or pause it as you deem necessary.

#3 Only Pay at Move-In

List your rental property as soon as you sign up for an account. Best of all, it's completely free to you. You'll only have to pay when you have renters move into your rental property.

Why List

Here are three major reasons you should list your property with Apartment List.

Top-Notch Matches

We collect renter data and analyze it thoroughly to better match your listings with your community. This data provides the necessary details to convert leads into renters.

Guaranteed Return on Investment

You don't have to pay for the Apartment List services until you have a guaranteed renter.

Seamless Integration

Apartment List works with the top property management systems on the market, providing seamless reporting integration.

Start the Tenant Hunting Search

In the Internet age, it's not surprising that most prospective tenants seek out new rentals online. Thankfully, this means starting your tenant search is as easy as firing up your computer. Here are a few keep steps to follow when you begin your searches.

Market Your Property

Marketing your property goes beyond getting it listed. You'll want to make sure you have high-quality, professional photosl of each room in the unit. Once you have your photos, you can begin writing your ad.

Here are some property management marketing ideas worth implementing:

• Analyzing your competition
• Creating content for your website
• Establishing your social media presence
• Emailing marketing and nurturing campaigns
• Creating a property page on review websites
• Partnering with local businesses and sponsor community events
• Creating referral program
• Videoing marketing and tours
• Advertising online

Be Strict with Your Tenant Screening Process

As you start receiving leads, you'll want to make sure you are strict with your tenant screening process. Remember, as a landlord, it's your responsibility to protect your property and the surrounding neighborhood. You must be diligent with screening your tenants.

It might be more time-consuming upfront to be stringent with your screening, but it will undoubtedly save you time, money, and headaches in the long run.

Create a Renter Application

While you can determine what aspects to include in your screening process, as a general rule of thumb, you'll want to have the following in your rental application:

• Name
• Current address
• Reason for moving
• Employment history
• Income
• Rental history
• Credit history
• References

Add Renter Rules in Their Lease Agreement

The lease agreement is a legally-binding document that helps guide the landlord-tenant relationship. Within the lease agreement, you can also include renter rules, which will dictate the rules for your tenant through the duration of their lease.

Take your time writing out the lease agreement, carefully detailing the renter rules. Being meticulous in the process will help to:

• Protect your tenant's rights
• Keep your expectations clear
• Set the procedures for notices and evictions
• Offer an understanding and agreement to rental terms
• Provide a written outline for recordkeeping purposes
• Prevent conflicts from arising due to misunderstandings
• Prevent confusion over rules, terms, and situations
• Protect you from liability

Renter rules will also help to detail the difference between a guest and a tenant. You always want to make sure that everyone living on your property is listed on the lease. Having a clear line between a guest and a tenant is crucial in keeping yourself protected.

Other important topics to cover in your rental rules include squatter rights and evictions.

Require Renters Insurance

In addition to landlord insurance, you should require that your tenants have a form of renters insurance to rent your property. Renters insurance will help you avoid litigation under the circumstances that the tenant's belongings are damaged.

Thankfully, it's easy to persuade renters to get insurance, as costs are often low. With renters insurance, their belongings are always protected.

Conduct a Credit and Background Check

Another way to see if tenants are financially responsible is conducting a background check. Some red flags to look out for on credit checks include:

• Prior eviction history
• Bankruptcy filing
• Undue payments
• Notable debt

Remember, you must be mindful of the Fair Housing Act when conducting background checks.

Collect a Security Deposit

If an applicant checks all the boxes, you'll want to move forward with collecting a security deposit. Here are a few tips to help you collect these funds from an applicant:

• Know your state laws on security deposits
• Discuss the security deposit with your tenant
• Detail all initial payments (deposits, first-month rent, etc.) on the lease agreement
• Collect deposit payments separate from rent payments
• Collect security deposits after the lease has been signed

Use a Renter Portal

Modern renters prefer the convenience of handling all of their requests on a digital portal. A renter portal allows your tenants to make rent payments, submit maintenance requests, etc., from the convenience of one place.

Utilizing a renter portal is beneficial for landlords too, as it creates a digital record of every transaction and request in one place. With time and date stamps, this information can be critical should you have any issues with your tenants later down the line.

Keep Good Tenants

When you have good tenants, it's your responsibility as a landlord to keep them around. One way to keep tenants around is to offer rent concessions upon lease renewal

Here are a few examples of rent concessions worth considering:

• Free Internet
• Free utilities
• Free use of on-site amenities (parking, storage, laundry)
• Allow walls to be painted
• Update decor or appliances
• Waived pet fees
• Reduced rent for a one-year lease
• One month of free rent

These by no means are all of the concession options available, which is why it’s important to know your tenants and foster your landlord-tenant relationship. In doing so, you'll get a better idea of what concessions are the most meaningful to them.