It’s a good time to be a landlord. Demand for rental property is high, and so are rents. On the flip side, many of your tenants may find themselves on shaky financial ground. In the current economic climate, it’s important to protect yourself and your property by taking certain precautions.

Get Started Create landlord and tenant documents Everything you need to be a successful landlord.

1. Find solid tenants

Choosing tenants is the most important decision you can make as a landlord. Start with our rental application to begin vetting potential tenants.

Give the rental application to every adult who will sign, or co-sign, the lease. You can use a rental application to:

  • Review references
  • Verify income and employment status
  • Confirm bank account information
  • Check an applicant’s credit report
You may charge a credit check fee that is reasonable relative to your actual cost. It is generally illegal to charge a fee if you don’t run the credit check.

2. Abide by fair housing laws

The last thing you want is fair housing complaints or discrimination lawsuits. When listing your property for rent, focus on describing the unit itself, and basic tenancy requirements. Here are some  guidelines to help you keep things legal:

  • Do not mention race, sex, sexual orientation, religion, disability, marital, or family status in a rental ad. If your property is officially recognized as housing for senior citizens, it’s okay to list age requirements.
  • You may want to apply the most generous occupancy standard allowable for the size of your rental unit. At the federal level, this is known as the “two-per-bedroom-plus” standard.
  • When deciding on reasons to accept or reject tenants, use “objective criteria” and apply them equally to all candidates. Examples include the following:
    • No prior bankruptcies
    • Two positive references from previous landlords
    • Income that is at least three times greater than the rent
    • Satisfactory credit report 
  • When rejecting rental applicants, keep a paper trail. On the rental application, note which criteria you used to deny the tenant.

3. Know how much you can charge for rent

In most states, you’re free to charge whatever price the market will allow.

According to real estate market analysis firm Reis Inc., the nationwide average for rent in July 2012 was $1091 per month. Wichita, Kan. ranked lowest for average, residential rents at $510 per month. New York City tenants paid the most at almost $3000 per month per unit.

Competitive tenant markets like New York City have rent control laws. Before setting a price, find out whether your property is subject to rent control laws. Then, check Craigslist, local property management, and real estate offices to determine the going rate for rentals similar to your own.

Quick tip: If your goal is to find and keep excellent renters, you could consider charging slightly less than the going rate. Tenants who feel like they’re getting a good deal may stay longer.

4. When in doubt, spell it out

Even if you know the prospective tenant well, outline the landlord-tenant relationship in writing. Get started with our free real estate lease.

A lease gives you legal proof of your agreement, and can be extremely helpful if you ever have a problem with the tenant later on.

You’ll want to include important details, such as:

  • Amount of monthly rent
  • Rent due date, grace period, and late fees
  • Deposit amounts and refund terms
  • Fixed term or month-to-month
  • How to quit or renew the lease
  • Pet policy
  • Handling of repairs and maintenance

It’s also a good idea to include a subletting clause in your lease, clarifying whether or not you’ll allow the tenant to let out the apartment to another tenant. For example, your tenants may want to use websites like airbnb or CouchSurfing to cut costs when traveling for work or taking vacations, but you can disallow this in the lease if you choose.

5. Evict if you must

Even when you have good reasons to evict a tenant, playing by the rules can help you protect yourself and your property.

Use a late rent notice to notify the tenant of the overdue rent. If the tenant is willing to pay, but just behind, you can use a late rent payment agreement to work out an alternate payment plan. If you suspect unauthorized pets or tenants, provide a landlord’s notice to enter one day to one week before inspecting the unit, depending on your local laws.

Different states have different laws regarding how to evict a tenant. Use our eviction process worksheet to outline the specifics of your situation. Then, choose the eviction notice for your state.

Keeping a paper trail can help, whether you need to evict a tenant, or fight fair housing complaints. We’ll help you find a real estate lawyerif you have questions or need more help.

Get Started Create landlord and tenant documents Everything you need to be a successful landlord.

Get Started Create landlord and tenant documents Everything you need to be a successful landlord.