Landlord Guide

Being a landlord looks simple on paper: buy property, collect rent, build wealth. The reality involves 2 AM plumbing calls, tenants who stop paying, and a web of local, state, and federal regulations that can turn a small mistake into a lawsuit. This guide covers the practical side of being a residential landlord — screening, leases, maintenance, and the legal rails you need to stay between.

Screening Tenants: How to Do It Right

Bad tenants are expensive. An eviction costs $3,500-$10,000 in legal fees, lost rent, and unit turnover. A thorough screening process is your best defense.

What to Check

1. Credit report: Look for payment patterns, not just the score. A 650 score with consistent on-time payments is more predictive than a 720 with recent collections. Red flags: recent eviction filings, multiple late payments, bankruptcy within the last 2 years.
2. Income verification: Request two recent pay stubs and verify employment directly with the employer. For self-employed applicants, ask for two years of tax returns and 3 months of bank statements. The 3x rent threshold is standard, but don’t just take the applicant’s word for it.
3. Rental history: Call the previous two landlords. Here’s the trick: the current landlord might give a glowing review just to get rid of a problem tenant. The landlord before that has no reason to lie. Ask specific questions: Did they pay on time? Was the unit left in good condition? Would you rent to them again?
4. Background check: Eviction history (check the county court records, not just national databases — national databases miss a lot) and criminal background. Be aware that HUD guidance discourages blanket criminal history denials — you need to assess the specific offense, how recent it was, and whether it’s relevant to the tenancy.

What You Can’t Consider

The Fair Housing Act prohibits discrimination based on race, color, religion, national origin, sex, familial status, and disability. Many states and cities add additional protected classes — source of income (housing vouchers), sexual orientation, gender identity, marital status, and more. Know your jurisdiction’s list.

Practical examples of violations: rejecting a family because you “don’t rent to kids,” requiring a higher deposit from a tenant with a service animal, advertising “perfect for young professionals” (implies familial status discrimination), or applying stricter screening criteria to certain applicant groups.

Setting Rent: Don’t Chase the Maximum

Most new landlords make the same mistake: pricing at the top of the market to maximize monthly income. Here’s why that’s often the wrong call.

Vacancy costs are brutal. If your unit rents for $2,000/month and sits empty for one month while you find a tenant, you’ve lost $2,000 plus turnover costs (cleaning, touch-up paint, listing expenses) — call it $2,500-$3,500 total. If you’d priced $100/month below market and kept your previous tenant for another year, you’d net $1,200 more ($100 x 12 months = $1,200 less, but you saved $2,500-$3,500 in turnover costs).

The math consistently favors tenant retention over maximizing rent. A $50-$100/month reduction that keeps a good tenant for 3 years versus annual turnover is simple arithmetic.

How to Price

• Check comparable listings on Zillow, Apartments.com, and Craigslist within a half-mile. Match on unit type, size, and condition.
• Adjust for upgrades: in-unit laundry adds $50-$100/month. Updated kitchen adds $50-$75/month. Parking spot in an urban area can add $100-$300/month.
• Factor in seasonality: summer listings attract more applicants and can command 3-5% more than winter listings. If your lease ends in December, consider an initial 13 or 14-month term to shift renewal to spring.

Lease Essentials

Use your state’s standard residential lease form or have a real estate attorney draft one. Do not download a generic lease from the internet — it probably doesn’t comply with your state’s specific requirements. Key provisions to include:

• Rent amount, due date, and late fee: Most states allow late fees of 5-10% of rent, charged after a grace period of 3-5 days. Some states cap late fees — check yours.
• Security deposit amount and terms: State the amount, what it covers, and the timeline for return after move-out.
• Maintenance responsibilities: Spell out what the tenant handles (light bulbs, air filters, lawn care) versus what you handle (HVAC repair, plumbing, structural issues).
• Pet policy: If you allow pets, specify: types allowed, weight limits, pet deposit (one-time) vs. pet rent (monthly), and damage liability. Note: you cannot charge pet fees for service animals or emotional support animals — that’s a Fair Housing violation.
• Entry provisions: Your state likely requires 24-48 hours notice before entering the unit except in emergencies. Put this in the lease.
• Lease term and renewal: Fixed-term (typically 12 months) vs. month-to-month. Define what happens at the end of the term — does it auto-convert to month-to-month? Does rent increase?

Security Deposit Handling

Security deposits generate more landlord-tenant lawsuits than any other issue. Protect yourself:

At Move-In

• Conduct a detailed move-in inspection with the tenant present
• Photograph every room, every wall, every appliance — with timestamps. Video is even better.
• Both parties sign a condition report documenting the unit’s state
• Store the deposit in a separate account (many states require this) and in some states (Connecticut, Maryland, New Jersey, and others) you must pay interest on it

At Move-Out

• Do a walkthrough with the tenant if possible
• Compare current condition against move-in photos
• Distinguish between damage (deductible) and normal wear and tear (not deductible). Scuffed paint from furniture? Wear and tear. Holes in the wall? Damage. Worn carpet from foot traffic? Wear and tear. Pet urine stains? Damage.
• Return the deposit within the deadline: 14 days (New York), 21 days (California), 30 days (Texas, most states), 45 days (Alabama). Miss the deadline and you may owe the full deposit plus penalties — some states impose treble damages (3x the deposit amount).
• If you withhold any amount, provide an itemized statement with receipts. “General cleaning – $500” without documentation won’t hold up in small claims court.

Maintenance Obligations

You’re legally required to maintain the property in habitable condition. This means:

• Functioning heating (and cooling in some jurisdictions)
• Working plumbing and hot water
• Structurally sound building — roof, walls, floors, foundation
• Functioning locks and secure doors/windows
• No pest infestations (though some jurisdictions split this responsibility)
• Working smoke and carbon monoxide detectors
• Compliance with local building codes

Response time matters. A burst pipe at 3 AM requires immediate action. A non-functional dishwasher can wait until business hours. Set expectations with your tenants: define what constitutes an emergency versus a routine repair request, and provide clear communication channels for both.

Budget 1-2% of the property’s value per year for maintenance. On a $300,000 property, that’s $3,000-$6,000 annually. You’ll spend less some years and more others, but the average holds over time.

When to Hire a Property Manager

Property managers typically charge 8-12% of gross monthly rent, plus a tenant placement fee (often 50-100% of one month’s rent for finding a new tenant). On a $2,000/month rental, that’s $160-$240/month for management.

It’s worth the cost when:

• You own 3+ rental units — the management overhead becomes unmanageable as a side gig
• You live more than 30 minutes from the property — you can’t respond to emergencies quickly
• You’re not handy and don’t have reliable contractors — a good PM has relationships with plumbers, electricians, and handymen at better rates than you’d get off Yelp
• You don’t want to deal with tenant calls, showing vacancies, and rent collection — the passive income appeal of real estate disappears fast when you’re managing tenants yourself

Eviction: The Nuclear Option

Eviction is a legal process with strict procedural requirements. Never do a “self-help eviction” — changing locks, shutting off utilities, removing doors, or dumping a tenant’s belongings on the curb. These actions are illegal everywhere and expose you to significant liability.

The process, broadly:

1. Notice to quit or pay: Typically 3-14 days depending on state and reason. Must be delivered properly (posted on door, mailed, or personally served — requirements vary).
2. File with the court if the tenant doesn’t comply after the notice period.
3. Court hearing: Both sides present their case. Bring your lease, payment records, photos, and all communication.
4. Judgment: If the court rules in your favor, the tenant gets a period to vacate (typically 5-30 days).
5. Writ of possession: If the tenant still doesn’t leave, the sheriff executes the writ and physically removes them.

Timeline: 3 weeks to 6+ months depending on jurisdiction. New York City evictions can take 6-12 months. Texas can be as fast as 3-4 weeks. Know your local timeline before buying rental property — it affects your financial risk calculation.

Frequently Asked Questions

Can I reject an applicant who uses a housing voucher?

Depends on your location. Source of income discrimination is prohibited in many states and cities — California, New York, New Jersey, Oregon, Washington, and dozens of cities have these protections. In states without these laws, you can legally decline voucher holders, but check your local ordinances first.

How often should I raise the rent?

For a good tenant in a non-rent-controlled area, consider raising 2-4% annually — roughly keeping pace with inflation and market increases. Raise too much and you risk losing a reliable tenant (turnover cost: $2,500-$5,000). Don’t raise at all for 3 years and you’ll be significantly below market, which is hard to correct without a large shock increase.

Do I need an LLC for my rental property?

An LLC provides liability protection — if a tenant sues, they generally can’t go after your personal assets beyond the LLC. It also provides some tax benefits. Most landlords with 2+ properties should have an LLC. For one property, the calculus is tighter — an umbrella insurance policy ($200-$400/year for $1M coverage) provides similar protection at lower cost and complexity.

What insurance do I need as a landlord?

A standard homeowner’s policy doesn’t cover rental properties. You need a landlord policy (also called a dwelling fire policy or rental property policy), which covers the building structure, your liability, and lost rental income. Cost: 15-25% more than a standard homeowner’s policy for the same building. Require tenants to carry renter’s insurance — it protects their belongings and provides them liability coverage, which reduces claims against your policy.

Related Resources

Know what your tenants’ rights are with our tenant rights by state guide. Create a solid lease agreement using our complete guide. Protect your investment with proper landlord insurance and keep your property in shape with our renovation ROI guide.