Managing rental properties can be a lucrative venture, but it requires effort, time, and careful planning. Landlords must ensure their properties are habitable and comply with state laws in order to avoid any legal issues. 

In this article, we share some tips that landlords can follow to ensure a smooth and profitable experience while renting their property.

1. Choose Your Tenants Wisely

The right tenant can be the difference between an easy renting experience and a huge headache that wastes your time and money. In the long term, it’ll be much cheaper to keep the same tenant rather than having to continually change tenants, which comes with cleaning and advertising costs. This means that selecting the right tenant should be your top priority. 

Be sure to use the background screening and credit check tools at your disposal to ensure that you find somebody reliable who you can trust to pay the rent. Aim to advertise in such a way that targets the type of tenants you want to find. Always meet your tenants face-to-face before signing to get a good impression and sense of whether or not you can trust them. 

2. Don’t Discriminate

According to the Federal Fair Housing Act, it’s illegal to deny an applicant because of their race, color, nationality, family status, disability, or sex. Be sure you are not rejecting any prospective tenants for discriminatory reasons. Instead, focus on the factors that you can legally base your decision on, including credit history, employment history, and income. 

Note that if you do reject an applicant because of their credit history, you must provide them with the name and address of the credit reporting agency you used. For this reason, it’s best to keep written documentation of your applicants, including reasons for their rejection when applicable. Strive to use the same screening process consistently with each and every applicant. 

3. Have a Good Lease

Your lease, or rental agreement, is an extremely important document that can legally protect you in case your tenant breaks the terms of your agreement. For this reason, it’s best to have a professional such as a real estate lawyer draft your lease to ensure that it is legally valid and protects your best interests. Your lease should include:

• The tenant’s name
• The length of the tenancy
• The security deposit amount
• Who is responsible for what repairs
• Whether pets are allowed
• The amount of rent
• When rent is due
• What form of payment is acceptable
• What happens if the tenant does not meet the terms of the agreement 

4. Inspect the Property Regularly

As a landlord, you are legally required to provide your tenants with a habitable rental property. This means that you must perform regular inspections to ensure that the premises are habitable. This includes protecting tenants from one another and criminals who may enter the property, as well as keeping the unit and surrounding areas in good condition without hazards.

5. Make Repairs in a Timely Manner

Another part of your responsibility to keep the property habitable is responding to your tenant’s concerns and requests for repairs. This is legally referred to as the "implied warranty of habitability." As such, you should strive to promptly repair any issues your tenant brings up that you are responsible for. This includes:

• Keeping the building structurally sound
• Keeping heating and cooling systems in good repair
• Keeping the electrical and plumbing in safe operating conditions
• Paying for an exterminator if there is an infestation 
• Ensuring the property is safe to live in

Depending on the state, if you fail to make a repair, your tenant may be able to legally take one or more of the following actions:

• Withhold rent
• Make the repair and deduct the cost from the rent
• Move out
• Inform local building inspectors
• Sue you for the difference between the rent and the real rental value of the property 

6. Give Notice Before Entering the Rental Unit

Most states protect tenants’ privacy by placing restrictions on when landlords may enter a rental unit. Typically, you may only enter a rental unit to make repairs, inspect the property, show the property to prospective tenants, or because of an emergency. In any case, you must provide verbal or written notice of your intent to enter a minimum of 24 hours before entry. If there is an emergency, such as a fire or gas leak, this overrides the requirement of notice. 

7. Keep Your Documents Organized

In the event of a legal issue, it’s important that you be able to easily access documents such as current and prior rental agreements, insurance documentation, and more. As a landlord, it’s absolutely key to stay organized and use a filing system that helps you easily find what you need. It’s up to you which organizational system feels most intuitive for you, but it may be worth considering using an electronic filing system, which reduces the likelihood of you losing important documents. 

8. Handle Security Deposits Correctly

Some states limit the amount you can charge for a security deposit to one month’s rent. Many also require you to return a security deposit within a certain time after the tenant moves out, as well as to allow the tenant to be present during a move-out inspection. Familiarize yourself with local laws regarding security deposits and be sure to follow them. Inspect and document the rental’s condition before tenants move in to avoid disputes over security deposits upon move-out.

9. Resolve Disputes

If a dispute arises with your tenants, try to resolve it informally. If that doesn’t work, you can often find a free or low-cost mediation service to help out. Otherwise, you may have to go to small claims court, where you can collect unpaid rent or seek money for property damage if the security deposit does not cover it. A consultation with a lawyer may help you determine the best course of action depending on the nature of the dispute.

10. Get Insurance

It is essential that landlords get the necessary liability and property insurance coverage to protect themselves from lawsuits by tenants as well as losses from issues such as fires, storms, theft, and vandalism.