Your First 30 Days

Week One — Protect Yourself

The first thing you need to do is make sure you are legally and financially protected. This is not optional and it is not something you can figure out later. If you own a property that someone else is living in or that you intend to rent out, you need landlord insurance immediately. A standard homeowner policy does not cover rental properties and if something happens your claim will be denied.

Call your insurance agent and tell them the property is being used as a rental. They will either convert your policy or write a new one. Landlord policies typically cover the structure, liability, and lost rental income. Expect to pay 15 to 25 percent more than a homeowner policy. This is not the place to cut corners.

While you are handling insurance, look into whether you should hold the property in an LLC. An LLC separates your personal assets from your rental business. If a tenant or guest is injured on the property and sues, an LLC protects your personal bank accounts, your home, and your other assets from being part of that lawsuit. Talk to a local attorney or accountant about whether this makes sense for your situation. In most cases it does.

Week Two — Understand Your Property

If you inherited the property or have not lived in it recently, you need to know exactly what condition it is in. Walk through every room. Check the roof, the HVAC system, the water heater, the plumbing, the electrical panel, the foundation, and the appliances. Write down the age and condition of every major system.

This is important for two reasons. First, you need to know what is going to break soon so you can budget for it. A 15 year old water heater is living on borrowed time. A 20 year old roof might have two years left or two months. Second, you need to document the current condition before a tenant moves in so you have a baseline for comparison when they move out.

Take photographs of everything. Every wall, every floor, every appliance, every fixture. Date stamp them. Store them somewhere you will not lose them. This documentation protects you in security deposit disputes and damage claims.

Week Three — Get the Numbers Right

Before you put a tenant in the property you need to know whether this rental actually makes financial sense. Add up every monthly cost. Mortgage payment including taxes and insurance. HOA fees if applicable. Anticipated maintenance costs. Vacancy allowance. Property management fees if you plan to hire someone.

Then look at comparable rental rates in your area. What are similar properties renting for? Not what you hope to get. Not what you need to get to break even. What the market will actually pay. If the market rent does not cover your costs with a reasonable margin, you need to know that before you commit to being a landlord rather than selling.

Set up a dedicated bank account for the rental property. All rent goes in, all expenses come out. Do not commingle rental income with your personal finances. This makes bookkeeping easier, tax preparation simpler, and provides a clear paper trail if you are ever audited.

Week Four — Prepare to Rent

If you have decided to move forward with renting the property, you need a lease agreement. Do not download a generic template from the internet and assume it covers you. Landlord-tenant law varies dramatically by state and even by city. A lease that is perfectly legal in Texas might violate tenant protections in California.

Get a lease reviewed by a local attorney who specializes in landlord-tenant law. This will cost you a few hundred dollars and it is one of the best investments you will make. A solid lease sets clear expectations, protects your rights, and gives you the legal standing you need if things go sideways.

Once you have your lease, your insurance, your financial picture, and your property documented, you are ready to start looking for a tenant. That process has its own set of rules and best practices which we cover in detail on the tenant screening page.