We've assembled a first-time landlord checklist that will help you generate passive income and create wealth for retirement through rentals.
Renting out a house for the first time? It’s okay to be nervous. After all, moving is as stressful for landlords as it is for tenants. As a new landlord, you need to learn all the legalities involved in leasing out a property. There are many things you need to keep track of, so it’s smart to follow a first-time landlord checklist.
Becoming a landlord is a stable form of investment and holds many benefits. You can generate passive income and even create wealth for retirement. Consider our guide to how much money a real estate investor should make to determine if you are getting compensated for your work.
To help you make the most of it, here’s a list of everything you need to know when renting out a house for the first time and answers to your first-time landlord questions.
What to do for first-time landlords? Well, checklists are very useful tools, particularly for inexperienced people. They help organize your tasks and make sure you don’t miss anything.
For landlords, it’s even more important to follow the process, particularly the legal nitty-gritty. Otherwise, you’re liable to legal action from your tenants.
To prevent any unwanted situation, here’s a landlord checklist for you to follow:
Firstly, your tenant’s safety is your top priority. In order to ensure your tenant’s safety, the very first item on your landlord checklist should be to perform routine checkups of the property to ensure everything’s okay. Additionally, depending on the country you live in, there’s a list of safety measures you need to take legally.
For example, landlords have to install (functional) smoke alarms on every floor of their property.
Moreover, carbon monoxide detectors need to be installed in every room that has a fuel-burning appliance (namely the kitchen).
Here’s a list of things you need to ensure are safe and viable to live in:
Additionally, make sure there are no rodents or vermin infestations. Also, there shouldn’t be any environmental contaminants such as lead, mold, or asbestos.
If when carrying out your inspection of the property you find things that are not up to code, this is the time to fix the problem. For example, if something’s wrong with the plumbing, have it fixed as soon as possible. Moreover, make sure smaller things like doors, windows, lights, or cabinets are perfectly functional.
If a door lock or window hinge needs replacement, We Buy Any House suggests it’s ideal to do it before potential tenants see the property. If something stops working during the tenancy organize to have it repaired as quickly as possible. Once a tenant moves in, all utilities have to be working properly. Lots of landlords face problems with property maintenance, having this item on your rental property checklist can help you stay on top of your property’s maintenance requirements.
If there’s a solid foundation, you won’t need to perform maintenance jobs as frequently and by taking care of maintenance requirements now you can reduce your maintenance costs in the future.
Additionally, make sure your rental is kept clean. Once your tenants have moved in, they are responsible for their own cleaning and maintenance. However, as a landlord, it’s your job to provide your tenants with a clean and hygienic space to move into.
EPC stands for Energy Performance Certificate, which reports how energy efficient your property is. You also need to include your EPC rating in any advertisements.
It’s best to check with local officials on what’s the EPC equivalent in your area. In essence, you need your EPC even before you start looking for tenants. Once you have it, you can follow any suggestions to improve your rating.
Many tenants are very aware of the issues associated with a low EPC rating. The property will be harder to keep warm in winter, and more expensive to run all year round. Having a good EPC rating can help you get better tenants and command a higher rent price.
What’s this? With current political turmoil regarding immigrant status, most legislations state landlords must check their tenant’s legal status in the country. As such, it’s a good idea to have this item on your rental house checklist. You can check your tenant’s immigration by assessing their identity documents.
Primary identity documents include:
Most of these checks you can do yourself. Alternatively, you can hire an agency to do any extra checks. Once you’ve performed the check, you’re legally required to report the tenant’s affirmative/negative status.
Check local and state laws to ensure you manage this process within the confines of the law.
Property management software like Landlord Studio can allow you to comprehensive tenant screening reports quickly and efficiently.
Once you’ve found your tenant, the next step when renting out a house for the first time is to come up with an appropriate lease agreement. A lease agreement includes:
*Right of entry states the conditions under which you, the landlord, are allowed to enter the property and with what amount of notice. For example, landlords can enter their tenants’ homes to perform repairs or routine maintenance.
Once you have the lease agreement, have a lawyer or legal expert go through it. Afterward, go through it with the tenant (in detail) to ensure no amendments are needed. If both parties are satisfied with all the terms, have the lease signed and dated.
The next piece of business on your landlord checklist is collecting the first and last month’s rent. If you’re a first-time landlord, this must be very exciting. As any experienced landlord will tell you, always collect the first month’s rent as well as the security deposit before the tenant has moved in.
There may be certain exceptions to this rule. For example, if your tenant is getting government aid, he/she can pay after the move-in date. Check for other exemptions under real estate law guidelines.
As for the last month’s rent, some countries legally require you to take both at the beginning of a lease. However, it’s not always necessary.
Related: The Best Ways to Collect Rent from your Tenants
Are you done with the above? Now, it’s time to get the locks changed. Technically, this step is only applicable if people were living in the property before the new tenant. If the tenant is the first ever to live there, you can ignore this step.
However, if not, you need to get the locks changed. This is both a safety measure and a way to protect yourself from possible legal issues.
Changing the locks every time a property welcomes a new tenant can become a time-consuming and costly exercise that can easily be avoided. Many landlords are now making the shift towards a wireless commercial door lock system, or ‘keyless access’ as it is commonly known, where doors are unlocked using keycards or through a mobile phone.
Advancements in technology allow for enhanced security management, as well as improved hygiene when it comes to avoiding contact with common touchpoints in multiple occupation properties. With keyless entry systems, landlords can simply change the access codes rather than replacing the entire lock when new tenants move in or if a tenant loses their keycard.
This is an important step. When your tenant finally moves in, go over the move-in checklist together. The move-in checklist is a document that specifies the condition of the rental unit. This is essential as both proof of the unit is safe and habitable, and also will be used should disputes arise over any deposit deductions at the end of the tenancy.
In sum, a move-in checklist includes:
Once the tenant has looked it over, have him/her sign and date it as proof. As you can infer, move-in checklists are very important as they allow you to track the changes in your property over time.
This may seem like a small thing to have on this list but think of it as a fall-safe. In case of emergencies or complaints, tenants need your contact information. Responsible landlords always provide their contact information with prompt response rates.
However, ensure your tenants know to call within business hours (unless there’s an emergency).
Sometimes tenants have special requests so it’s a good idea to have this on your landlord checklist so you don’t forget to check. For example, the tenant may want to paint the walls another color as opposed to the standard white. Additionally, you may receive a disability accommodation request.
If the request is based on wants more than needs, you can decide whether you want to accommodate it or not. However, ensure that the condition is within the lease. Charging an extra fee for re-painting the walls is okay as long as it’s in the lease.
On the other hand, if you receive a request to accommodate a disability, you’re legally bound to follow through.
If you’ve gone through our first-time landlord checklist, you know there are many documents you need to give/show your tenant.
Some we’ve mentioned above, but here are the rest:
Most governments (at a state or federal level) have checklists for each stage of the leasing process. You can easily find this checklist on your local government website. You’re legally required to give this checklist to your tenant.
Secondly, you need to pass inspections by the local Health and Safety Executive. The gas safety inspection, in particular, should be performed annually. Once you’ve received the certificate, give it to your tenant.
For example, in the UK, the law requires you to hold your tenant’s security deposit in a third-party, government-backed scheme. If you live there, you must give your tenant details of the scheme.
Once you are ready you can use these apps as a real estate investor to track your cash flow and become a better landlord.
Simply put, whether you’re a business professional or an avid investor, first-time landlords have their work cut out for them. Yes, follow this first-time landlord’s advice to avoid any legal liability. However, by following this first-time landlord checklist, you can become a more responsible landlord and investor. If you think this is too much work, you can always try real estate crowdfunding to invest in real estate for passive income.
Through this guide, we hope we’ve made the process easier for you. Are you ready to be a landlord? Let us know in the comments below.
Learn how you can streamline your rental accounting and management with Landlord Studio →
This is a guest post by Financial Wolves, a blog about making money with side hustles to help you achieve financial freedom.