First-time landlord checklist: 12 steps before you hand over the keys

Lots of landlords got here recently, and a fair number did not exactly plan to. In a December 2025 survey of its own users by Avail (about 1,945 respondents, not a representative sample), 53% of independent landlords said they started in 2021 or later, and nearly a third described themselves as "accidental" landlords renting out a former home. If that is you, this checklist puts the setup steps in a sensible order, from the insurance call to the first rent payment. Work through it before the tenant gets keys, not after.

1. Switch to a landlord insurance policy

A standard homeowners policy is written for a home you live in. Once a tenant lives there, call your agent and ask about a landlord (often called dwelling) policy instead. Ask specifically about:

• Coverage for the building and anything you own inside it, such as appliances.
• Liability coverage if someone is hurt on the property.
• Loss of rental income if the unit cannot be lived in after a covered loss.

Your policy will not cover the tenant's belongings. Many landlords require renters insurance in the lease, where state law allows it.

2. Tell your mortgage lender, and your HOA if you have one

Some mortgages require you to live in the home for a period of time, and loan documents can have other occupancy terms. Read yours and call your servicer before you sign a lease. If the property is in a homeowners or condo association, read its rules too. Some limit rentals, set minimum lease terms, or require tenants to register.

3. Check your city and county rules

Many cities and counties require a rental license, a registration, or an inspection before a unit can be rented, and some have their own rules on rent increases, notices or smoke and carbon monoxide detectors. Search your city or county website for "rental registration" or "rental license", or call the local housing or code office. It is far easier to do this now than after a complaint.

4. Open a separate bank account for the rental

Before any money arrives, open a checking account just for the property. Rent goes in, property expenses go out, and personal money stays out of it. It makes the year-end numbers simple and makes it easy to see whether the rental is actually paying for itself. If you own more than one property, some landlords open one account per property.

5. Set the rent

Look at what comparable units nearby are listed for right now: same area, similar size, similar condition. Then check your own numbers: mortgage, property taxes, insurance, HOA dues, a realistic amount for repairs, and a month or so of vacancy between tenants. If market rent does not cover the costs, better to know now. If you are renting to a relative below market, be aware that IRS guidance treats those days as personal use, which limits what you can deduct (IRS Publication 527); talk to a tax professional first.

Former homeowners have one more tax question to raise: the home sale exclusion generally requires that you owned and lived in the home for two of the last five years before selling. Renting it out starts that clock moving, so ask a tax professional how it applies to you.

6. Decide your rent collection and late fee policy

Decide how rent will be paid, when it is due, and what happens when it is late, before you write the lease, because all three belong in it.

• How tenants pay: online by bank transfer or card, check, or a mix. Some states do not let you require online-only payment; see online rent payment rules by state.
• Due date and grace period: many landlords use the 1st, with a few days' grace.
• Late fee: the amount and when it applies. Some states cap late fees or require a grace period, so check late rent fee laws by state before you pick a number.

7. Take applications and screen lawfully

Write down your rental criteria before you list: for example, income relative to rent, rental history, and what you check. Then apply the same criteria to every applicant, in the same order, and keep notes on why you approved or declined each one.

The federal Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status and disability, and many states and cities add more protected categories, such as source of income. That affects what you say in your listing, what you ask applicants, and how you decide. If you use a credit or background report and turn someone down because of it, federal law requires you to give the applicant an adverse action notice. Read your state's fair housing rules, or ask a local attorney if you are unsure. This is general information, not legal advice.

8. Put the lease in writing

Use a written lease for every tenancy, even with someone you know. At a minimum it should cover the parties and every adult occupant, the property, the term, the rent, the due date and how to pay, late fees, the security deposit, who handles which repairs and utilities, pets, guests, entry notice, and how either side ends the lease. Use a lease written for your state, because required disclosures and terms vary. Sign it before move-in, and give the tenant a copy.

9. Handle the security deposit by your state's rules

States set limits on how much you can collect, sometimes where you must hold it, whether it earns interest, and how quickly you must return it with an itemized list of deductions after move-out. Get this right from the first day, because deposit mistakes are expensive to fix at move-out. See security deposit laws by state for the deadlines and limits.

10. Do a move-in inspection with photos

Walk the unit with the tenant on or just before move-in day. Go room by room with a written checklist: walls, floors, windows, appliances, fixtures, and anything already damaged. Take dated photos or video of every room, including close-ups of existing wear. Both of you sign the checklist and each keeps a copy. Some states require a move-in condition report; even where they do not, this is what protects your deposit deductions later.

11. Set up rent collection before the first due date

Do not wait until the 1st to figure out how rent will arrive. Set up the first month's rent ahead of time, invite the tenant, and make sure they know exactly how to pay. If you are weighing fees, our guide to collecting rent online covers what to look at. Whatever you choose, keep a running ledger of every charge and payment for each tenant.

12. Keep records for Schedule E from day one

Rental income and expenses for most individual landlords go on Schedule E. Start a simple system now: every expense receipt saved and labeled by category (repairs, insurance, taxes, mortgage interest, supplies, travel to the property), rent recorded as it arrives, and the closing documents and improvement receipts kept in a safe place. It is much easier than rebuilding a year in April. Talk to a tax professional about depreciation and what is a repair versus an improvement.

After the first month

• Confirm the first rent arrived and is recorded correctly.
• Set a calendar reminder for lease renewal and any rent increase notice period (see rent increase notice by state).
• Make it easy for the tenant to report repairs, and respond quickly to the first one. It sets the tone for the whole lease.

How RentMerchant fits

RentMerchant covers several of the steps above in one place. You can take online rental applications, send the lease for e-signature, and store documents such as the signed lease and move-in photos. You set the rent once as a recurring monthly invoice that goes out automatically, with reminders before and after the due date and an automatic late fee if you choose one. Tenants pay by bank transfer or card, and rent pays out to your own bank through Stripe. Security deposits are tracked separately, tenants can submit maintenance requests, and the expense tracker has a Schedule E export.

RentMerchant does not offer tenant screening yet, so you would use a separate screening service for step 7. The Free plan covers up to three properties with unlimited units. See the full feature list, or create a free landlord account and set up your first property.