Step 1 – Type of Lease
Landlords, Owners and Property Managers whom decide to rent out their unit(s) to Tenant(s) in exchange for rent payments need to first decide on the type of lease options they want to offer Tenants. The options include a short-term (seasonal), a long-term, or vacation
lease agreement
Agreement Types Depending on Lease Duration and Tenant Audience:
Long-term lease – Minimum of one-year (12 months) or more. These Tenants typically are young professionals or family units where one needs to stay consistently in one geographic area to be close to a job or school for long periods of time.
Short-term lease – Up to one-year (12 months) or for monthly (month-to-month). These Tenants tend to be college kids where they need to rent an apartment living space for 9 months out of the year before going home for summer vacation at parents house.
Vacation lease – One-month (30 days) or less. These Tenants range in all different walks of life as one travels throughout their lifetime and it’s becoming more common especially after the pandemic where people work remotely and also study remotely online.
Step 2 – Preparing the Rental Property for Showings
Once the final decision is made on the lease type, the next step is to prepare the rental property for showings – in person and online. This step is when a cleaning company might help or a painter to fix interior and/or exterior touch ups. The plumber might also need to be contacted in case a faucet is leaking or a toilet is clogged.
A trip to Lowe’s or Home Depot might be a good idea for light bulbs, smoke detectors (including the compatible batteries), and having extra keys made (think extra keys for Lock-box, Brokers and Tenants).
Double check all of the essentials needed to make your home is 100% habitable prior to showing or posting any videos or pictures of the rental space online or in print ads..
Step 3 – Finding the Right Tenant(s)
The third step is finding and vetting potential Tenant(s). This is done by listing the property online, including entering information in the Multiple Listing Service (MLS). This may be the point where you will consider hiring a Real Estate Broker to help with the leasing process to avoid any financial or legal issues.
Step 4 – Preparing a Rental Application
A rental application serves to uncover three major concerns for an owner of property about a Tenant:
Criminal history
Credit history
Previous evictions by prior landlords
If a
Tenant passes all three checks, then verify Tenants employment and means of paying rent. Landlords have the legal right to ask for government-approved identification, a social security number, and an applicant’s legal status.
Law Alert ⚖️
The Fair Housing Act, 42 U.S.C. 3601↗, prohibits landlords and property owners from discriminating (denying) prospective tenants the ability to rent based on the following criteria:
disability
familial status or national origin
race or color
religion
sex
Ways to Screen a Tenant:
TransUnion SmartMove↗ – TransUnion offers a tenant screening service called SmartMove. It allows landlords to request credit reports and criminal background checks on prospective tenants. SmartMove provides a credit-based recommendation that helps you assess the tenant’s financial stability and risk profile.
Experian Connect↗ – Experian offers a similar service called Experian Connect. Landlords can request credit reports and view a tenant’s credit history. This can help you gauge their creditworthiness and financial responsibility.
Local Court Records↗ – You can check your local court’s website or visit in person to search for eviction records, judgments, or any legal disputes involving prospective tenants. This can give you insight into their rental history and legal issues.
Social Media and Online Searches – Conducting online searches and checking social media profiles can provide additional information about a tenant. While this isn’t an official screening method, it can give you an idea of their lifestyle, behavior, and any red flags.
Step 5 – Tenant Views the Space
Lease-Agreements-Step-4
Depending on the property owner, one may choose to require a rental application from the applicant either prior or after viewing the property. There could be disclosures you will need to offer each tenant before they view the property, depending on the state.
Law Alert ⚖️
The most common disclosure required by the federal government is the Lead-Based Paint Disclosure, which requires owners of property built before 1978 to give prospective tenants a pamphlet (PDF)↗.
Step 6 – Verify References
Landlords and property owners should be particular when asking for references from a prospective tenant. Asking of personal friends or family as references serves little use. There are no laws or limitations an owner must abide by when contacting references. When asking for references, it’s best to ask for the following contacts:
Previous and current employer;
Prior landlord/owner of rented property.
Step 7 – Approving the Tenant
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A landlord can approve a tenant for any reason. However, when it comes to rejecting a tenant from occupancy, the landlord must give the reason (which must be legal). A rejected application is due to a negative report on a credit report.
Law Alert ⚖️
The Fair Credit Reporting Act↗requires property owners/landlords to disclose the information as to why a rental application was denied. Landlords must provide the denied applicant with the following:
A written statement explaining the adverse facts
A source of the reporting agency
Step 8 – Signing the Lease
Leases can be signed online using services such as DocuSign↗ or eSign↗. If the lease is signed in person, having the lease notarized is recommended. Property owners do not need to be named on the lease if a property management company controls the property. Verbal agreements are not legally binding.
All persons who have applied to reside at the property;
Owner or manager of property;
If signing in person, a notary (public officer) is recommended.
Step 9 – Occupancy
The Tenant(s) have the right to occupy the property on the start date stated within the
lease agreement unless otherwise written and agreed upon. Once the tenant has begun to occupy the property, the owner loses their right to enter it without proper notice. The lease agreement termination will be outlined in the agreement.
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