Becoming a landlord is a business decision. Before you list your first property, these foundational items need to be in place.
This is non-negotiable. Every state has specific rules governing security deposits, notice periods, eviction procedures, habitability standards, and required disclosures. Violating these laws — even unintentionally — can result in fines, voided leases, and liability in court.
At minimum, know your state's rules on: maximum security deposit amounts, security deposit return timelines, required notice before entry, eviction notice requirements, late fee limits, and required lease disclosures.
Your homeowner's insurance policy does not cover rental properties. You need:
Many landlords operate rental properties under an LLC for liability protection. An LLC separates your personal assets from your rental business. Consult an attorney or accountant about whether this makes sense for your situation, as the benefits and costs vary by state.
Do not commingle rental income with personal funds. Open a dedicated checking account for rental income and expenses. This simplifies tax preparation, provides a clean paper trail, and is required by some states for security deposit handling.
Rental income is taxable. Common deductions include: mortgage interest, property taxes, insurance premiums, repairs and maintenance, property management software fees, depreciation, travel to the property, and professional services (attorney, accountant). Keep receipts for everything.
Before a tenant moves in, the property must meet your state's habitability standards. At minimum:
Before the tenant moves in, document the condition of every room with photos and written notes. This is your baseline for assessing damage at move-out and making deductions from the security deposit. Without documentation, deposit disputes become your word against the tenant's.
Research comparable rentals in your area. Look at similar properties within a 1-mile radius with the same bedroom/bathroom count. Online tools like Zillow Rent Zestimate, Rentometer, and local Craigslist/Facebook Marketplace listings provide market data. Price too high and the unit sits vacant (vacancy costs more than a slightly lower rent). Price too low and you leave money on the table.
Include: rent amount, security deposit, lease term, bedroom/bathroom count, square footage, pet policy, parking, included utilities, and move-in date. Quality photos are essential — listings with professional photos get significantly more inquiries. Photograph every room, the exterior, and any standout features.
Never skip tenant screening. A comprehensive screening includes:
Federal fair housing law prohibits discrimination based on: race, color, religion, national origin, sex, familial status, and disability. Many states and cities add additional protected classes. Apply the same screening criteria to every applicant. Document your process.
Do not use a generic template. Your lease must comply with your state's specific requirements for disclosures, deposit limits, notice periods, and required clauses. AI lease drafting tools can generate state-specific leases with actual statute citations in minutes.
Follow your state's rules exactly. Some states require the deposit to be held in a separate escrow account. Some require you to provide written notice of where the deposit is held. Some require you to pay interest on the deposit. Non-compliance can result in penalties of 2–3x the deposit amount.
Walk through the property with the tenant. Document every room's condition with photos and notes. Have both parties sign the inspection report. This is your protection against unfair damage claims at move-out.
AI lease drafting, $0 rent collection, maintenance tracking, inspections, and 50-state legal compliance.
Start Free — 1 Unit Forever →Paper checks create friction and delays. Set up online rent collection with automatic payment reminders and late payment detection. Encourage tenants to use autopay. The easier you make it to pay, the more consistently they pay on time.
Tenants need a clear way to submit maintenance requests, and you need a way to track and prioritize them. A shared text thread is not a system. Use a platform that categorizes requests by urgency, stores photo documentation, and tracks resolution status.
Save all communication with tenants, receipts for repairs and improvements, rent payment records, inspection reports, and lease documents. Cloud storage is ideal — physical documents get lost. You will need these records for tax preparation, potential disputes, and eventual sale of the property.
Budget for 1 month of vacancy per year. When a tenant moves out: conduct a thorough move-out inspection, compare to the move-in documentation, handle the security deposit within your state's required timeline, make necessary repairs, and prepare the unit for the next tenant.
AI-powered lease drafting, $0 rent collection, and 50-state legal compliance. Free for your first unit.