How to Be a Great Landlord: Ten Tips for Success

A successful rental business is built on a strong foundation. The key to long-term success (and overall satisfaction) is to attract and keep great tenants. Here are some essential tips to help you get started on the right foot.

1. Prepare Your Property and Business for Renters

Before you even list your property, you're going to have to do some prep work to get the rental and your business processes dialed in. Planning is crucial for both new and experienced landlords. Make sure you:

• Secure insurance. Protect your investment by purchasing enough liability and other property insurance. A well-designed insurance program can protect you from lawsuits by tenants for injuries or discrimination and from losses to your rental property caused by everything from fire and storms to burglary and vandalism.
• Set up utility bills. Put the utilities, including water and trash, into your name. You can always transfer them to the tenant later.
• Make necessary repairs. You have a legal duty to provide a safe and habitable rental. Ensure that all appliances, plumbing, and HVAC systems are in good working condition before you show the property.
• Organize your records. Establish a reliable system for tracking potential tax deductions, tenant complaints, rent payments, and all other information relevant to managing your property. Good record keeping is essential for managing your business efficiently.
• Understand the applicable landlord-tenant laws. State laws cover every aspect of renting out property: choosing tenants, providing a habitable rental, collecting and using security deposits, dealing with tenants who pay rent late or cause other problems, and much more. Even if you hire a property manager, you still remain legally responsible should things go wrong.

2. Thoroughly Screen All Applicants

Require a completed rental application from all adults who will be living in the rental. Don't rent to anyone before checking their credit history, references, and background. (Note that some states and cities prohibit you from inquiring about an applicant's criminal history.) Ensure that your screening procedure doesn't violate any fair housing laws, and don't collect any application fees that aren't allowed under state law. Haphazard screening and tenant selection too often result in problems, such as a tenant who pays the rent late (or not at all), trashes your place, or lets undesirable friends move in.

3. Get Everything in Writing

A detailed, written lease or month-to-month rental agreement is vital. It should clearly outline the terms of the tenancy, including the basics about rent payment and tenant responsibilities, the security deposit, and dispute resolution.

It's also smart to provide a move-in letter that covers important policies such as how tenants can report needed repairs, quiet hours, and garbage and recycling policies. You can attach it to your lease or rental agreement or post it in a conspicuous place at the rental.

4. Handle Security Deposits Properly

Establish a fair system of setting, collecting, holding, and returning the amounts tenants pay up front as a security deposit. Before the tenant moves in, document the condition of the rental unit with photos, video, or a checklist to prevent disputes when the tenant moves out. Check out your state's law to ensure you are handling and returning security deposits correctly.

5. Prioritize Maintenance and Repairs

Stay on top of maintenance and repair needs, and respond promptly to maintenance requests. Neglecting repairs can not only alienate good tenants but also lead to legal issues. Tenants might have the right to withhold rent, make repairs themselves and deduct the cost from the rent, sue you for injuries caused by defective conditions, or move out without giving notice.

6. Enhance Property Security

Don't let your tenants and property become easy marks for a criminal—landlords have a legal duty to take reasonable measures to prevent crime at their rentals. Assess your property's security and implement simple, effective measures like good lighting and trimmed landscaping.

7. Respect Tenant Privacy

Tenants have a right to privacy in their homes. Always notify your tenants whenever you plan to enter their rental unit. Learn your state's law about how and when you have to give notice. If your state doesn't have a landlord entry law, provide as much notice as possible (at least 24 hours is considered reasonable in most situations).

8. Disclose Environmental Hazards

If there's a hazard such as lead, mold, or bed bugs at the property, tell your tenants, either before they move in or as soon as you become aware of the problem. Landlords can be held liable for tenant health problems resulting from exposure to environmental toxins in the rental premises. Check your state law for other required landlord disclosures.

9. Carefully Supervise Property Managers

If you decide to hire a property manager or a management company, you'll need to choose and supervise them carefully. If a manager commits a crime or is incompetent, you might be held financially responsible. Conduct a thorough background check and clearly spell out the manager's duties in a written agreement.

10. Try to Resolve Conflicts Peacefully

Lawsuits are expensive and time-consuming, so it's in your best interests to take reasonable steps to avoid heading to court. If you have a conflict with a tenant over rent, deposits, repairs, your access to the rental unit, noise, or some other issue that doesn't immediately warrant a termination and eviction, meet with the tenant to see if the problem can be resolved informally.

If that doesn't work, consider mediation by a neutral third party, often available at little or no cost from a publicly funded program.

If your dispute involves money, and all attempts to reach an agreement fail, try small claims court, where you can represent yourself. Small claims court is good for collecting unpaid rent or seeking money for property damage after a tenant moves out and the security deposit is exhausted.

Need More Help?

Although being a landlord can be challenging, there's not much you can't handle on your own by doing a bit of research. Nolo offers a number of landlord books that provide nearly all the information you'll need to operate legally and efficiently. Also, there's no need to start from scratch to create forms such as a rental application or lease—Nolo has many landlord-tenant forms available on its website.

That said, there are some legal issues a landlord probably shouldn't tackle on their own, such as responding to fair housing complaints, personal injury lawsuits, and contested evictions. When you're faced with a legal problem that has the potential to cost you a lot of money or seriously damage your reputation, it's best to consult with a local landlord-tenant attorney.