Rental Purchased! What’s Next?

[David Hernandez]

Hi! I am very close to closing out on my first rental property. Besides a few tweaks, home is move-in ready. I want to get a “checklist” of what I need to do next in terms of the legal side and paperwork to get this thing rented out (or even steps I need to take prior to renting it out, such as getting insurance and a contract agreement). Since I have little experience, can you advise on those things that can be overlooked by a newbie landlord like me? Thank you!

[Travis Main]

Hey David, 

Congratulations on being so close to closing on your first rental property! That's an exciting milestone. As you prepare to rent it out, it’s great that you’re thinking ahead about the legal and paperwork aspects. For your insurance, you will want to make sure you have landlord insurance policy in place. This is different from homeowner’s insurance and will cover things like property damage, liability, and loss of rental income. You will also want to draft a comprehensive lease agreement that outlines terms such as rent amount, due dates, security deposit, maintenance responsibilities, and any house rules. It's worth consulting a local attorney or using a reliable legal service to ensure it complies with state and local laws. You will also want to develop a tenant screening process that includes credit checks, background checks, employment verification, and references from previous landlords. This helps mitigate the risk of renting to unreliable tenants. I would also try to familiarize yourself with local landlord-tenant laws, including fair housing regulations, security deposit limits, and notice requirements for entering the property or terminating a lease.

Prior to renting, conduct a thorough inspection of the property before the tenant moves in, and document the condition with photos or a video walkthrough. Have the tenant sign off on a move-in checklist to avoid disputes later.

If your not using a property management company, you will also want to establish a plan for handling maintenance requests and emergencies. You might want to set up a dedicated email or phone number for tenants to reach you or your property manager.

Set up a system for tracking income and expenses related to the property. This will be important for tax purposes and overall financial management.

If you're feeling overwhelmed at the end of all this, consider hiring a property manager or consulting with a real estate attorney who can guide you through the process and handle any legal concerns.

[Drew Sygit]

@David Hernandez do you have legally acceptable rental application and lease?

How will you obtain background/credit checks?

Fair Housing compliant applicant screening process?

How will you handle nonpayment issues with tenants?

What about maintenance?

[Jaron Walling]

You should already have insurance on this property BEFORE closing. 

[David Hernandez]

Quote from @Jaron Walling:

You should already have insurance on this property BEFORE closing. 

Thanks for letting me know. At what point during the sale am I allowed to get insurance? Also, can you advise on what kind of insurance is best for a (first time) landlord? It's a SFR.

[David Hernandez]

Quote from @Drew Sygit:

@David Hernandez do you have legally acceptable rental application and lease?

How will you obtain background/credit checks?

Fair Housing compliant applicant screening process?

How will you handle nonpayment issues with tenants?

What about maintenance?

 You are absolutely right! I have solidified some of those processes but need to work on finishing the remaining. I appreciate this.

[David Hernandez]

Quote from @Travis Main:

Hey David, 

Congratulations on being so close to closing on your first rental property! That's an exciting milestone. As you prepare to rent it out, it’s great that you’re thinking ahead about the legal and paperwork aspects. For your insurance, you will want to make sure you have landlord insurance policy in place. This is different from homeowner’s insurance and will cover things like property damage, liability, and loss of rental income. You will also want to draft a comprehensive lease agreement that outlines terms such as rent amount, due dates, security deposit, maintenance responsibilities, and any house rules. It's worth consulting a local attorney or using a reliable legal service to ensure it complies with state and local laws. You will also want to develop a tenant screening process that includes credit checks, background checks, employment verification, and references from previous landlords. This helps mitigate the risk of renting to unreliable tenants. I would also try to familiarize yourself with local landlord-tenant laws, including fair housing regulations, security deposit limits, and notice requirements for entering the property or terminating a lease.

Prior to renting, conduct a thorough inspection of the property before the tenant moves in, and document the condition with photos or a video walkthrough. Have the tenant sign off on a move-in checklist to avoid disputes later.

If your not using a property management company, you will also want to establish a plan for handling maintenance requests and emergencies. You might want to set up a dedicated email or phone number for tenants to reach you or your property manager.

Set up a system for tracking income and expenses related to the property. This will be important for tax purposes and overall financial management.

If you're feeling overwhelmed at the end of all this, consider hiring a property manager or consulting with a real estate attorney who can guide you through the process and handle any legal concerns.

 Thank you so much Travis. This is AWESOME insight that has helped me move in the right direction. I appreciate this more than you imagine!

[Niyi Adewole]

Quote from @David Hernandez:

Quote from @Jaron Walling:

You should already have insurance on this property BEFORE closing. 

Thanks for letting me know. At what point during the sale am I allowed to get insurance? Also, can you advise on what kind of insurance is best for a (first time) landlord? It's a SFR.

 Hi David, 

Congrats on taking your first step into the real estate investing world!! Regarding insurance, i would recommend working with an insurance broker (happy to DM you the one i utilize) and they can shop for the best one for your rental. 

I agree with a lot of the advice already given (i.e. legal lease agreement, maintenance team, etc) i would HIGHLY recommend utilizing a property management software to run everything through. I personally utilize Buildium to run my long term/mid term rental properties and it allows us to conduct tenant screening, applications, tenant payments, and maintenance requests all through the portal.