How to Become a Landlord: A Beginner’s Guide

Lately, I’ve been getting a lot of questions from people who are thinking about keeping their current home as a rental when they move. With so many homeowners locked into low interest rates, turning your current home into a rental can be a smart way to build long-term wealth. I speak from experience, as I have done this for my family. Over the last 10 years we have moved every 2 years and kept our previous home as a rental every time. But being a landlord also comes with its challenges and it’s important to know what you’re getting into.

Here’s a practical guide to the basics of becoming a landlord—from running the numbers to handing over the keys.

*This information is based on long term rentals, often 1 year leases. Much still applies to short term or mid term rentals. These tips are for those that want a more hands on approach. If you don't have the time and energy to self manage, you can hire a seasoned property manager to help with all of the steps in the process.

1. Run the Numbers First

Before you decide to rent out your home, do a thorough financial analysis. Here’s what you need to look at:

• Estimate your rental income. Zillow’s Rent Zestimate is a good place to start. You can also look at comparable rentals in your area.

• List your expenses:

  • Mortgage

  • Property taxes

  • Insurance

  • HOA dues

  • Utilities you plan to cover

  • Property management fees (typically 6–10% of rent)

  • Maintenance reserve (a good rule of thumb is to budget 1% of the property value annually, but this depends on age and condition)

Pro Tip: Even if you plan to manage the property yourself, budget for your time as a management expense. Your time has value. One of the biggest mistakes small landlords make is undervaluing their own effort.

If the numbers show you’ll break even or better, it’s likely worth keeping the property as a rental. Appreciation and mortgage paydown over time can result in long-term financial gain, even if the property does not cash flow. But if you’re not in the green after this analysis, compare it to what you could net if you sold the property. Sometimes selling makes more sense.

2. Find the Right Tenant

The right tenant makes all the difference. Here’s how I go about finding one:

• Where to list your rental:

  • Zillow (my go-to—great visibility and tools)

  • Facebook Marketplace

  • Apartments.com

• Use professional photos. Cell phone shots won’t cut it. High-quality photos help attract serious inquiries. Including a video tour or floor plan can also make a big difference in attracting qualified renters.

• Showings: I recommend time-blocking showings in 15-minute increments. Many prospective tenants flake, so this way you're not sitting around for one no-show.

Here’s my typical response to an inquiry:

“Hi [Name], thanks for your interest! I’ll be at the property on [date/time]—are you available to stop by then?”

This simple call to action helps weed out non-serious renters.

3. Screen Your Applicants

Once you have interested renters, use a platform like Zillow to collect applications. Tenants pay the screening fee directly and you receive:

• Credit report

• Background check

• Eviction history

• Employment/income verification

  
  

4. Create a Lease (That Complies With the Law)

In most states, landlord-tenant law can be complex and ever-changing. It’s critical to use a lease that complies with local laws.

• If you’re in Colorado, here is the lease I use https://www.zumbrennen.com/store/p/residentialleasepackage

• Read up on local rental laws. Knowing your rights and responsibilities will help you avoid costly mistakes.

  
  

5. Set Up Rent Collection and Deposits

There are plenty of online platforms that make collecting rent easy:

• Zillow and Apartments.com both allow tenants to pay online (some even with a credit card). Funds usually deposit by the 10th of the month, so plan accordingly if your mortgage is due earlier.

• Open a separate checking account for each rental property to keep finances clean.

• An escrow account for security deposits is often required if you’re a licensed real estate professional and is a helpful best practice for anyone.

  
  

6. Move-In Prep

A smooth move-in sets the tone for the lease. I like to:

• Send a move-in letter with:

  • Utility setup instructions

  • How to contact me (phone/email/text)

  • Trash pickup day

  • Access info (garage codes, Nest, Ring accounts, etc.)

• Provide a move-in condition form so tenants can document the condition of the home.

  
  

7. Be Ready for Maintenance

Most of the time, being a landlord is quiet—until something breaks.

• I let tenants text me issues—it’s fast and I can act quickly.

• Have a reliable team: plumber, handyman, electrician, landscaper. I rarely visit the property myself—I just send trusted vendors.

8. Stay Ahead of Lease Renewals

Don’t wait until the last minute to figure out whether your tenant is staying or going.

• Check in about 60 days before the lease ends. This gives you time to prepare—whether that means offering a renewal, adjusting rent, or beginning to market the property.

• Giving your tenant a clear, early heads-up helps avoid unnecessary vacancy and makes turnover (if it happens) much more manageable.

Pro Tip: If the tenant has been great, make it easy for them to stay. Good tenants are worth keeping, even if it means skipping a small rent increase.

Some other note worth items:

Insurance Adjustments

• Your current homeowner’s policy likely won’t cover rental activity. You’ll need a landlord (or “dwelling”) insurance policy, which includes liability coverage in case a tenant or visitor gets hurt on the property.

• I also carry an umbrella policy for myself to provide extra coverage

• Encourage tenants to carry renter’s insurance—you can even include it as a lease requirement.

• For additional liability coverage, it may make sense to put your property in an LLC. You need to do your research to ensure this will not trigger an issue with your mortgage.

Local Licensing or Permitting

• In some cities (including parts of Colorado), rental licenses or registrations are required even for single-family homes. Check with your local municipality

• Denver, for example, requires a residential rental license, an inspection, and a fee.

Fair Housing Laws

• You’re a housing provider now, and federal fair housing laws apply to you—even if you’re only renting out one property.

• Avoid language in your listing or tenant selection that could be considered discriminatory (e.g., “no kids,” “ideal for single professionals,” etc.).

Accounting

• Rental income is taxable, but you can also deduct many expenses: mortgage interest, property taxes, repairs, depreciation, management fees, etc.

• I keep a simple spreadsheet that lists out all of the income and expenses I incur. This is why having a separate account for the property can be helpful in keeping track.

Exit Strategy & Taxes

• Becoming a landlord does not mean you have to do it forever. There may be tax advantages to keeping a property for only a few years. If you have occupied the property as your primary residence for at least 2 of the last 5 years then you may not need to pay capital gains taxes when you sell.

• It's a good idea to make sure the property is cash flowing as you expected, if not, it might be time to sell.

Final Thoughts

Becoming a landlord isn’t just about collecting rent. It’s a business—and like any business, it takes time, planning, and the right mindset. If you treat your rental like an investment, stay organized, and work with good people, it can be a fantastic way to build long-term wealth.

Still weighing whether to rent or sell? Let’s talk. This is a decision worth getting right, and I’d love to support you on your real estate journey.