How to Manage a Rental Property (2024)

In this article:

Landlord obligations
Property maintenance obligations
Tenant management obligations
Rental property record keeping
Rental property accounting

You don’t need to be a management pro, real estate expert or professional contractor to manage a rental property. Property management, however, does require time to keep up with tenant requests, rental property maintenance issues and the business of landlording — such as collecting rent and tracking your expenses. According to the Zillow Group Consumer Housing Trends Report 2018, of the homeowners who currently rent or plan to rent their home, 81% are interested in long-term renting₁.

Use this landlording 101 guide to help you manage properties you already own or plan on purchasing, so you can get the most out of your real estate investment.

Landlord obligations

For many people, being a landlord is a rewarding and profitable experience, but it’s not a simple endeavor. Understanding some key landlord responsibilities, property marketing tactics and areas of the law goes a long way to help you find (and keep) a tenant, effectively manage your rental and avoid the most common landlord mistakes. And sometimes the best skill is knowing when to call a professional. Here are the most important obligations of a landlord:

1. Find a tenant

There are many ways to find a great tenant — try these tactics to fill your rental:

Advertise the property for rent. Write a rental ad, take photos of the interior and exterior and market your property online.

Host a rental open house or schedule individual showings. Set an open house date or schedule appointments with interested renters. Send reminders for appointments, and make sure to give the current tenant advance notice (if the property is occupied).

Send out applications. Invite interested renters to apply online and then see if they meet your rental requirements. With Zillow Rental Manager, you can easily accept applications online.

2. Screen tenants

Zillow Rental Manager makes screening tenants easy — and there’s no cost to you. During the tenant screening process, you will:

Accept or deny rental applications. Be sure to comply with all applicable fair housing laws, which prohibit discrimination based on race, color, nationality, age, sex, familial status and other criteria.

Run a background check. This will show you the applicant’s rental and criminal history.

Verify the applicant’s credit. In addition to a background check, you’ll also run a credit check.

3. Sign a lease agreement with your tenant

Once you find an applicant who meets your qualifications, you’ll have them sign a lease agreement. Here are the steps:

Create your lease.
Run the lease by a legal adviser.
Review the lease with your tenant.
Sign and date the lease with your tenant.
Provide your tenant with a copy of the lease and store your own copy securely.

4. Protect your tenant’s rights

Understand the rights that apply to your tenant once they sign a lease agreement:

Fair housing laws
State-specific tenant laws
Landlord repair obligations

5. Give tenants proper notice

You must notify your tenant about certain things, including:

6. Provide a safe and habitable property

As a landlord, you should make sure:

All smoke and carbon monoxide detectors work.
There’s hot water and heat in the rental.
Proper safety equipment is available, such as a fire extinguisher or flotation device (if you have a pool).
All locks are re-keyed before the tenant moves in.
The property is free from lead-based paint.
The property is free from mold, rodents, roaches or bedbugs.
The tenant knows about any other repair issues and when they’ll be resolved.

Property maintenance obligations

Maintaining your property doesn’t just help the tenant — it also preserves your investment. Some benefits of regular maintenance include:

Increased or stable property value
Reduced tenant turnover
Reduced number of emergency repairs
Extended life for flooring, appliances and fixtures

Make sure your property is up to code and is inspected annually for any issues that may not be easily identifiable. Here are the best practices for taking care of your property:

1. Perform routine maintenance

While it’s primarily the landlord’s responsibility to manage a property and ensure it’s habitable, both you and your tenant can perform maintenance. Make sure to establish who’s responsible for what in your lease agreement, and use a maintenance checklist to track monthly, seasonal and yearly tasks.

Monthly tasks:

Check for pests and exterminate if necessary.
Test smoke and carbon monoxide detectors.
Check that fire extinguishers are in working order.

Seasonal tasks:

Check for water damage and leaks, especially after a rainy season.
Inspect the roof after heavy snow, hail or wind.
Clean the gutters.
Trim trees that are near structures, power lines or property lines.

Yearly tasks:

Examine shower caulking and grout between tiles to prevent mold.
Change filters in your forced air systems (do this twice a year).
Flush your water heater to remove sediment.

2. Handle emergency maintenance promptly

Some repairs require immediate attention. Handle these issues as soon as possible:

Broken furnace or heater
Gas leak or the smell of gas
Electrical issues
Water leaks
Clogged sewer lines

3. Supervise all hired personnel

If you’re handy, you may prefer to manage your rental property yourself — but some states have laws dictating that electrical and plumbing work must be handled by a professional. Whenever someone is performing maintenance, you need to ensure they’re supervised. This includes:

Contractors
Vendors
Maintenance workers
Inspectors
Electricians
Plumbers

It’s important to respect your tenant’s privacy. Most states require a landlord to give at least 24-48 hours of notice before entry, or a longer period specified in your lease or by applicable laws. In the event of an emergency repair, you may not need to give notice, or you may be able to provide notice afterward. Check your state’s landlord-tenant laws for regulations about the management of properties.

Tenant management obligations

It’s important for a landlord to understand the basics of how to manage tenants. You should dedicate time to keeping up with tenant requests and rental property maintenance issues, along with your other landlording responsibilities.

1. Communicate with tenants regularly

Make sure you’re approachable and easy to reach. Tenants may have questions about property rules or need subtle prompting to report minor issues. Communication and flexibility go a long way in attracting and retaining quality tenants.

If you manage multiple units: Use a property management tool to keep track of when you last communicated, as well as each tenant’s preferred method of communication.

If you manage a single property: Calling or texting may be the easiest way to manage a single unit. Just be sure to find out what the tenant prefers.

2. Respond promptly to repair requests

Not only is it your obligation under landlord-tenant laws, it’s crucial to maintaining your investment. Fixing issues while they’re small can save money in the long run by preventing larger problems. Your state’s landlord-tenant laws may even dictate how quickly you need to respond to certain requests.

Minor issues: Many states allow up to 30 days to repair things like broken blinds or a dead lightbulb.

Major issues: If the furnace goes out or there’s a water leak, you will likely have to get it fixed as soon as possible.

3. Send rent reminders

This is one of the best property management tips for new landlords: give formal notice when the rent is due. These reminders are helpful for the tenant, but they also help you be clear and firm about your expectations. While you want to maintain a friendly relationship with your renters and be considerate of extenuating circ*mstances, this is your business.

If you manage multiple units: A property management tool can send out rent reminder emails to each of your tenants. If you use Zillow Rental Manager to receive payments from your tenant, the system automatically sends a reminder email a few days before the rent is due.

If you manage a single unit: Consider setting up a recurring email to remind your tenant their rent is due (three to five days before the deadline).

4. Ensure proper safety measures are taken

If you’re managing your own rental property, be sure to remind tenants to be safe during inclement weather or when using the property’s amenities, such as a grill or elevated porch. If there’s any large safety hazard, like a pool, make sure your lease covers it.

In the summer: Send safety reminders for outdoor activities like barbecues or fires (if you have a fire pit).

In the winter: Provide tips on how to avoid freezing pipes, and remind tenants to watch for ice on walkways.

Rental property record keeping

One of the most important aspects of the management of properties is keeping a record of landlord documents. Store all documents securely, and consider keeping paper or digital backups. This will help avoid any liabilities and make sure you’re organized during tax season.

1. Store proof of property and landlord insurance

This will protect your rental property from accidents and sudden loss due to a fire or severe weather — and help protect your financial assets in the event of a liability claim. If you’re going to manage property, you may want landlord insurance in addition to your standard homeowners insurance. Depending on what your existing policy covers, landlord insurance may cover additional costs associated with renting a property, including:

Damages by tenants to the home’s structure
Legal costs in the event of a lawsuit or eviction
Medical expenses in the event of an accident
Loss of rental income if major repairs are needed

2. Keep a copy of all rental applications

Many states have laws about this. Regardless of the legal requirements, we recommend keeping a copy of all applications (whether they were accepted or denied) for at least four years. They will be useful if:

An applicant files a discrimination claim. You’ll need to prove that you didn’t violate any fair housing laws when accepting or denying an applicant.

There’s a tenant emergency. Most applications contain an emergency contact section.

To make it easier for you and your prospective tenants, consider having all interested renters apply online — 58% of renters prefer to apply online according to Zillow Group Consumer Housing Trends Report 2019 survey data₂, and digital records are easy to back up and print out if needed.

3. Securely store all rental lease agreements

Lease agreements hold you and your tenant accountable — and if you don’t have a copy of the signed lease, it may be more difficult to settle disputes. Having a copy of your lease agreement can help:

Protect you, the landlord, from additional liability.
Prevent confusion over the terms and rules of renting the property.
Ensure you and your tenant understand your responsibilities.
Protect your tenant’s rights.
Properly file a petition for eviction.

4. Keep a record of rent receipts

Some cities and states require landlords to provide rent receipts upon request. Even if your area doesn’t, it’s a good idea to keep rent receipts, because they:

Show proof of payment.
Simplify your rental property bookkeeping.
Help minimize payment disputes.

5. Document your rental walkthrough checklists

During move-in and move-out, you should inspect the property with the tenant and document the condition of the rental with a walkthrough checklist. Make a copy for yourself and the tenant, so you can account for any new damage when they move out and it’s time to return their security deposit. To complete the walkthrough:

Inspect each room and record anything that needs to be cleaned, painted, repaired or replaced.
Track the cost of any repairs that are needed.
Write down what was discussed during the walkthrough.
Have all parties sign the tenant move-in checklist.

Rental property accounting

Managing your own rental property means you’ll also have to handle financial details. Once you’ve set the rent price, you’ll need to know how to manage rental property income and expenses. Rental property bookkeeping includes:

1. Collecting rent

There are many ways to collect rent, but doing it online is often easiest for you and your tenant. In fact, 57% of renters say they want to pay rent online, but only 38% are given the option₃. In addition to collecting rent, you may have to:

Increase the rent price by a reasonable amount each year, if allowed by your lease.
Enforce late fees and collect late rent payments.

2. Managing security deposits

When you manage property, you also need to manage security deposits that you choose to collect. Security deposits can help cover any damage or issues that are captured in a tenant’s move-out checklist. To properly manage security deposits, you’ll need to:

Securely store deposits while the tenant is renting your property.
Comply with state security deposit limits and return regulations.
Account for pet damages.

3. Filing taxes and reporting expenses

It may be beneficial to hire an accountant who can help you understand the tax rules for rental property. They’ll help maximize your deductions and report your expenses.

Potential sources of rental income:

Monthly rent payments
Advance rent payments for future months

Common rental property expenses:

Landlord insurance for accidents, sudden loss and liability
Maintenance and repair
Rental licensing, mandatory inspections and annual registration fees
Property and rental income tax
Mortgage payments
Basic utilities like gas, electric and water
Property taxes
Marketing or advertising fees

Additional expenses to prepare for:

Bookkeeping or accounting fees
Property management fees (if you choose to hire a property manager)
Legal costs in the event of an eviction — you’ll have filing, court and lawyer fees

If you have more than one rental property, you may be required to complete additional tax forms. Talk to an accounting professional to ensure your rental property income and expenses are reported properly.

Those are the basics of how to manage property. For more articles and information on being a landlord, visit our Rentals Resource Center.

Source:

1. Zillow Group Consumer Housing Trends Report 2018

2, 3. Zillow Group Consumer Housing Trends Report 2019 survey data