Rental Property Turnover: A Step-by-Step Guide for Landlords

Where do entrepreneurship and the military lifestyle meet? Rental property! Plenty of military homeowners successfully take on this type of business, but not without careful planning and preparation. If you’re considering leasing your home, learning the ins and outs of turning over a rental is paramount before deciding to become a business owner and property manager.

The ideal timeline to prepare a rental property is twelve to six months before your tenant's arrival, but military life might not give you that flexibility. Take on this rental property turnover checklist as it fits your timeline and budget.

1. Organize Your Finances to Support the Rental Business

It’s never too early to review your finances and how they will affect the rental business. Saving for repairs and improvements is just the start of the cash flow.

Plan for Taxes

Your income taxes will be affected after your rental opens. To maximize your deductions, you need to understand things like operating and capital expenses. You might even hire an accountant to stay on the right side of the IRS. Tips for Managing Your Rental Property's Finances explains more about how to navigate the tax implications.

DIY Property Management or Hire a Professional?

Early on, you’ll need to know the pros and cons of becoming a landlord vs. property manager to handle the property upkeep for rentals. Local landlords often take on the duties to save money, but a professional could be a lifesaver if you’re a long distance landlord. Property management fees average about 10% of the monthly rent, depending on the services you choose and your location.

Calculate the Potential Rent

Finding the number that makes your rental profitable requires research. Of course, you’ll want to cover the mortgage and hopefully earn more, but will your market tolerate that number? Review comparable rentals in the area for guidance. Add your expenses for things like insurance and repairs, then compare them to the zip code’s BAH or the amount you think renters will pay.

2. Collect the Paperwork

Every profitable business has i’s to dot and t’s to cross. Take advantage of your free time to familiarize yourself with these topics related to administrative property upkeep for rentals.

Review Lease Agreement Examples

Begin to research state-specific rental leases. Each state has its own version, and they differ enough that a generic agreement won’t cut it. Compiling a list of items that you want to include to customize the lease is also a good idea, for example, requiring renters insurance. Explain clearly what the landlord is responsible for and what is expected of the tenants.

A big decision to make for your lease is whether your property is pet-friendly. If so, to what extent? Only dogs? How much will the pet deposit be? These are some of the questions to answer, knowing that limiting or restricting pets will cut your potential renter pool.

Learn Landlord and Tenant Laws

It’s important to learn about federal and state landlord/tenant laws to protect your business. Federal Fair Housing laws guard renters from discrimination, and state laws specify protections for landlords and tenants. You’ll also want to know about the Servicemembers Civil Relief Act (SCRA) and whether you or your tenant needs a military clause in the lease. Both can change the terms of a signed lease.

Convert Your Homeowners Insurance

Your homeowners insurance coverage changes when converting your house into a rental property. The tenant’s renters insurance does not cover your property. Comparing prices and coverage from multiple insurance companies is the best way to maximize protection and to save money.

Research Home Warranties

Investigate home warranties, especially if you are a long-distance landlord. The options are varied and can be pricey, but ultimately, the coverage can save you thousands if you think the major systems, like HVAC, are on their last legs. For some owners, the policy’s peace of mind is worth the expense. However, a warranty might not be needed if you have a dedicated fund for repairs and improvements.

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3. Prepare Your Property for Renters

Allow yourself more time (and probably money) than you initially calculate to take on these rental conversion chores and avoid excessive rental property turnover.

Physical Improvements

Your property should be in pristine condition to attract the best tenants and secure the highest monthly rent. Overall, renters prefer engineered or wood flooring, so heavily consider removing old, dirty carpeting. Renters also pay more for fresh, neutral paint so that their belongings don’t feel out of place.

Potential tenants are also searching for bathroom and kitchen updates. Other minor repair items, such as running toilets, holes in drywall, and leaky showers, should be fixed. By law, any hazardous condition has to be rectified before tenants move in.

Start a Rental Home Binder

Most often, tenants want to take care of your home because it creates a comfortable lifestyle. Provide a collection of manuals and instructions for household goods. This allows them to learn specifics, like troubleshooting and cleaning schedules. Organize a collection of information (it can be digital) and include phone numbers for preferred service vendors or detailed instructions for changing furnace filters. Everything that makes the house tick with regular maintenance should be included.

4. Attract Your Ideal Tenant

Always start by decluttering and deep cleaning. They do wonders for your advertising and tenant walk-through success rates.

Online Advertising

Creating an attractive online advertisement takes some practice. Photos drive the majority, if not all, of the traffic, and there is some science to achieving the best photos of your home’s interior and exterior. You’ll want to use the best angles, resolutions, and times of day for optimal lighting. 3 Easy Steps to Take Amazing Photos for Your Home Listing teaches you how.

Property Description

Write your description to attract the perfect tenant. Address their concerns by including key information in the listing, such as the schools zoned for the house, commute times to base, the house’s features (bedrooms and bathrooms), monthly rent, and other attractive qualities like a pool membership or a bonus room. How to Create an Unforgettable Home Listing takes away the guesswork.

5. Before and After Your Tenant Arrives

Your hard work has paid off. Now it's time to choose renters and build a hospitable relationship.

Run Tenant Background Checks

When marketing is done well, expect inquiries to come in quickly. Have options for background checks for renters and credit checks at the ready. These are designed to protect both the owner and applicants.

If tenants refuse to provide the information you request, it's likely best to move on to another candidate. RentRisk provides everything you need to ensure background and credit checks are done properly.

Require a Move-In Checklist

Once you’ve settled the lease, ask your tenants to sign off on a definitive move-in checklist. Because you have current photos and videos of the empty home, this should be an easy negotiation. The tenants should also make note of items they find damaged to avoid charges later. A move-in checklist is also a good indicator of what the move-out checklist will have.

After the Tenants Have Moved In

After so much preparation, it will feel like a relief when quality tenants move in and begin taking care of your home. Still, it’s not the time to sit back and count rent payments. Without burdening the tenants, schedule regular maintenance check-ins to ensure the house is functioning properly and to address any issues. The best way to maintain the home’s condition and a constructive relationship with your renters is to keep an open dialogue going throughout the lease term.

Ready to become a landlord? MilitaryByOwner has a full library of everything you need to know. Refer back to our blog and resource articles to explore topics such as landlord-tenant relationships, finances, and advertising. And don't miss our free guide for landlords below!