About This Guide
Considering Becoming a Landlord
Types of Rental Property
The most common types of residential rental property include:
- Mobile Home
- Basement Suite
The Benefits of Investing in a Rental Property
The Downsides of Owning an Investment Property
Should I Rent Out My Property?
- Do I have the time to commit to managing a rental property?
- Am I comfortable dealing with potentially difficult tenants?
- Can I make repairs myself or do I need to hire a professional?
- Am I organized?
- Do I understand my tax obligations?
- Am I familiar with my state’s landlord-tenant laws?
Understanding Zoning Laws
Insurance for the Rental Property
- Property damage: Covers damage caused by tenants as well as fire, storms, vandalism, and theft.
- Liability: Pays legal costs and medical payments if tenants or visitors who get injured on your property.
- Loss of income: Compensates you for lost rent if your tenants have to leave your property because of damage.
- Repair or replace property damaged by fire, vandalism, or theft (computers, electronics, clothes, furniture, bikes, and more)
- Cover injuries or damages caused to their guests or visitors (they can pay legal costs as well as make medical payments)
Preparing Your Rental Property
Preparing Your Rental for Tenants
- Check all appliances to make sure they work, including the oven, dishwasher, and washer or dryer
- Test smoke detectors and CO2 detectors
- Repair any problems, such as holes, water leaks, pests, etc.
- Give the walls a facelift with a fresh coat of paint
- Replace or clean flooring
- Upgrade fixtures and/or window treatments
- Clean each room thoroughly, including hard-to-reach spaces, such as cabinets and other storage areas
- If you have steps or stairs in the unit, ensure they are strong and safe to use
- Hire a professional to check that all electricity, heating, and plumbing are working properly
- Ensure that doors, gates, and windows have working locks
- Eliminate any bad odors
- Landscape front and back yards, gardens, etc.
Should I Hire a Property Manager?
- Screening tenants and negotiating lease terms
- Discussing leasing and property rules with a tenant
- Collecting rent or other fees
- Arranging for repairs, maintenance, and upkeep
- Paying bills, assisting with taxes, and managing a budget
- Enforcing rental rules and policies
- Setting rental rates and advertising the property
- Issuing notices
- Handling move-in and move-out inspections
Other reasons you might hire a property manager:
- You live far away from your rental property.
- You’re not interested in managing a rental property.
- You don’t have enough experience to successfully manage the property. In that case, a property manager can help ensure you are renting legally.
Staging Your Rental Property
Advertising Your Rental Property
- Your rental price and if it includes utilities
- The square footage of your property
- What you are charging as a security deposit (usually equal to one month’s rent)
- Availability and length of the lease term
- Whether you will allow smoking or pets
- If there are any additional incentives, such as parking
- Information about the neighborhood and surrounding areas
- How you wish to be contacted
There are many places you can advertise your property (both free or paid). Some of your options include:
- Online classified ads
- University housing boards
- Word of mouth through family and friends
- Social media
- Renting bulletins or apartment listings
- Newspaper ads
- A rental sign on your property
- Community bulletins, such as at a grocery store or recreation center
- Listing the property with a real estate agent
Managing Your Tenants
Screening Applicants Using a Rental Application
- Their employment history and income
- Their rental history
- Credit information
- Clean the property
- Create a Lease Agreement, go through the terms, and sign the agreement
- Change the locks and cut an extra set of keys
- Provide your tenant with your contact information
- Collect the first month’s rent, security deposit, and pet deposit or fee, if required
- Conduct a rental inspection with the tenant and sign the report. Provide them with a copy
- Test lights, appliances, fans, locks, and smoke detectors with the tenant present
- Provide the tenant with bylaws or condo rules, if applicable
- Transfer any utilities to the tenant’s name, if applicable
- Determine the best method of communication for both parties
State Landlord-Tenant Laws
Your Residential Lease Agreement
- Protects you from liability
- Prevents confusion over terms, rules, or situations
- Prevents conflicts or issues that arise from misunderstandings
- Provides a written outline of the tenancy for recordkeeping purposes
- Offers a demonstrated understanding and agreement to the rental terms
- Sets out the procedures for notices and eviction
- Keeps expectations clear
- Protects a tenant’s rights
Types of Lease Terms
Permissions in a Lease Agreement
- Will you allow all kinds of pets, or only certain pets? Will you charge a pet deposit or fee?
- Will you allow the tenant to make improvements to the rental property, such as painting the walls?
- Will you allow smoking in the rental property?
- Are home businesses permitted in the rental property? (Often, home businesses are a zoning issue, and depending on the size and income of the business, it may or may not be permitted.)
- Will other occupants be allowed to stay in the rental property?
- Will the tenant be allowed to sublet or assign the Lease Agreement?
Determining Your Rental Price
- Do rentals in the building or surrounding neighborhood include utilities in their rent?
- Is your rental property in an attractive neighborhood where charging utilities would not affect demand?
- Would charging utilities deter tenants or does it offer them an opportunity to save?
- Would making tenants responsible for utilities change their usage?
- Does the building have a master meter or are utilities divided by suite?
- Would installing energy-efficient light bulbs, low-flow toilets, or sealed windows help lower the cost of utilities?
Landlord and Tenant Rights and Responsibilities
- Following the terms of the Lease Agreement
- Paying rent on time
- Taking reasonable care and maintaining cleanliness of the rental property
- Not disrupting neighbors
- Complying with building rules
- Properly disposing of trash
- Complying with building/housing codes
- Making sure the property is clean, safe, and sanitary, and conducting all repairs in a timely manner
- Following responsibilities laid out in the Lease Agreement, such as maintenance of the structure and the appliances
- Maintaining the infrastructure for plumbing, electrical, heat, water, etc. in the property
- Providing an area to dispose of trash
Signing Your Lease Agreement
Maintenance and Repairs
Collecting Rent Payments
Managing Your Rental Finances
Landlord and Tenant Notices
- Notice of Termination: provides a landlord with notice that a tenant is going to terminate a tenancy.
- Notice of Repair: notifies a landlord of any repairs that need to be made to the rental property.
- Intent to Vacate: informs a landlord of a tenant’s wish to vacate the rental property once the lease term is over.
- Notice to Pay or Quit: gives notice to a tenant to pay any outstanding rent payments with the option to evict a tenant if they don’t pay.
- Notice of Termination: notifies a tenant that they won’t be able to renew the tenancy.
- Notice of Lease Violation: warns a tenant of a lease violation. If they don’t remedy the situation, the landlord has the option to evict the tenant.
- Notice of Rent Increase: provides a tenant with notice that their rent will be increasing.
Evicting a Tenant
- Conduct illegal activity on the premises
- Pose a danger to you or to neighbors
- Breach the Lease Agreement
- Continue to make late rent payments, even after receiving written warnings
- Cause significant damage to the property
- Collecting the keys
- Signing the Rental Inspection Report
- Collecting a forwarding address for your tenant to deliver any future mail
- Asking for their feedback about their experience with the property, building, neighbors, and more so you can improve aspects of your business for the next tenant.
- Offering yourself as a reference for your tenant