Before you even begin searching for a tenant, consider purchasing landlord insurance. A landlord insurance policy is the best way to protect your investment and covers you in case renters cause damage or take legal action against you.
Keep in mind, however, it is a good idea for the tenant to also get renters insurance, as landlord insurance does not cover personal belongings.
To market your property and find the right tenant, you can try any of the following tactics:
- Post the listing on rental websites
- Share property information with followers on social media
- Place an ad in the local paper
- Utilize word of mouth
If using an application form, it's a good idea to give a standard application to all prospective tenants. It can cover leasing terms and request all important information, such as:
- Employment history and income information
- Social Security number
- References, including previous landlords
- Rental history, including evictions
- Pet information
Once you put together your application forms, it is always smart to have an attorney review them before giving to the tenant.
Collect rent checks through a P.O. box, drop box, electronic transfer, or PayPal, and don't share your home address with your tenant.
If someone has a low credit score and a history of not paying their bills, they may not be the ideal tenant. In some states, landlords are allowed to charge the applicant for the cost of running a credit check. If not, the landlord will have to pay for it — but it might be worth the cost. A credit report can give you insight into important financial information, such as:
- History of late payments
- Accounts in collections
- Current debt
Running a background check can give you details about the applicant's past, including:
- Criminal history
- Relevant public records, such as legal disputes
- Eviction history
Please note: Landlords cannot use any background check service available. According to the Fair Credit Reporting Act, you must use a Consumer Reporting Agency.
Once you have taken all of the necessary precautions to screen your tenant, schedule some time to review and sign the lease. This is the last chance you have to bring up any concerns or note any disagreements before entering into a contract.
Figure out how you want to receive payments (including security deposit and first and last month's rent, if applicable), and try to establish that expectation up front. Aside from getting a check each month, there are a few options for rent collection available:
- Direct Account Transfers: A simple and free solution if your bank allows it, but you have to give your account and routing number to your tenant.
- ACH: An automated clearing house allows you to withdraw money directly from the tenant's bank account.
- PayPal: Collecting rent via PayPal is fairly easy, but is hard to automate and can come with fees, depending on the source of the funds.
- Rent Collection Services: These systems can automate collection and even late fees, but you usually have to pay monthly for the service.
At the end of the move-in process, consider doing an inspection with the tenant to document any issues. By noting any cosmetic problems and making sure everything is functioning properly upon move-in, you will better know if there is additional damage when the tenant moves out of the home.
Once you have completed all of the steps above, it's time to give your tenant(s) the keys and copies of all the paperwork. This would also be the time to collect the security, cleaning and pet deposits, as well as first and last month's rent (if applicable).