Preparing a property for rent takes more than just good intentions; it requires careful steps to ensure success. Maybe you want to become a rental property investor, maybe you have a house you don’t know what to do but don’t want to sell, maybe you have a condo you want to rent out for a while, or maybe you like the idea of providing houses to those in need. Whatever the reason, you must do a few things before you grab a cell phone (not that I recommend taking photos with a cell phone!) and start taking pictures to list on websites.
Why do you want a rental property? I have listed some of the reasons above, but I will tell you why it is important to know why. You will encounter difficulties regardless of your experience level, knowledge, preparation, location, etc. Knowing why will help you keep going when things get tough.
Documents, documents, and more documents – While you know that you need a lease and may not be considering renting out a rental property to a resident just with a handshake, that’s not enough to get the business going. Before I go any further, I want to ensure that I am NOT an attorney. This is for Lake County, IL, and it’s relevant for now, but it may not be next year. So contact an appropriate legal counsel to seek advice that suits your situation. Getting all these documents may be overwhelming, but once you have them, I recommend contacting a local real estate attorney (NOT the one specializing in sales transactions, but those who know about landlord/tenants’ law inside and out are always learning new changes,) and have them review them.
Application document—Once you list your unit, you will eventually do showings, and potential residents will ask you, “Where can I fill out the application?” You obviously need an application, and you had better collect ALL the necessary information, as it’ll be much harder to do once the unit is rented.
Lease agreement—At least in Illinois, a handshake deal might be valid but is not enforceable, so you should have a lease regardless of who you rent the unit to.
Disclosures
Lead Paint Disclosures—If the unit was made before 1978, you must provide a lead paint disclosure and a pamphlet.
Radon Disclosure—In Illinois, Starting in 2024, you must provide this along with the pamphlet to the resident.
Floodplain Disclosure – This is new in 2025. This is why you can’t have the mindset of “set it and forget it.” Things keep changing in this industry!
Move-In Report—Before the resident moves in, it’s a good idea to create a move-in report with pictures and videos. Subscribing to software such as zInspector or RentCheck will make the process a lot easier.
Lease-related documents – There are too many to cover, so I’ll just put some of them here.
5-day notice
10-day notice
30-day notice
Late Payment Notice
Non-Renewal Notice
Lease Cancellation Notice
Early Termination Notice
How to communicate - Email and cell phone will do the trick, but you must decide whether to separate your personal email from your business email. You must also decide whether to give away your cell number or get another number to separate personal and business calls. Sometimes, a phone call is the best method, but email/text will have records.
Tech Stack: The days of running a rental business using pen and paper are long gone. While you can still do it, I recommend using software to make the business run faster, more efficiently, and more accurately. What technology are you going to incorporate into your rental business? (Yes, it’s a business, even if you only have one unit.) Different technologies can help you manage your property, collect rent online, handle maintenance requests, organize tasks, track income and expenses, take move-in inspection photos, sign documents, log mileage, expand texts, check criminal history, communicate, organize your calendar, deposit checks, organize photos, calculate return on investment, scan documents, manage locks, take notes, and more.
Property management software – There are a lot of different options when it comes to property management software. It’ll be beyond this blog to list them all, but do your best to find the best software. None of them are perfect, and each software has pros and cons.
Document signing software eliminates the chance of anyone forgetting to initial or sign a document. You won’t be able to complete it without initialing or signing it.
Accounting software – While most property management software will handle some accounting, it may not handle all. You may want to invest in another software to complement the property management software. There are 3 ways to do it.
You want the property management software to do everything. When I say everything, I mean the cost you paid an attorney to set up an LLC, the mortgage payment you made for your rental property, the money you paid Amazon to buy an excellent property management book (like this one), etc. This sounds like the no-brainer solution because you only need to have one software (property management software) to do everything. The only downside is that most of the property management software does an excellent job recording rent received, repairs you paid, etc., but not so much when you start talking about recording the mortgage payment (because now you need to record the assets, and you need the balance sheet, etc.) recording depreciation, etc.
So why not just use accounting software like QuickBooks Online? It handles assets, depreciation, etc., very well, but you need to customize it quite a bit to make it work as property management software.
Or get both to avoid any challenges. I personally do this. I want to give myself the best tool to run the business, even if it costs a bit more.
Open a bank account or two - This will depend on who manages the property (you or your property manager), who owns the property (you or your company), whether you hold a security deposit, and so on. That said, I recommend opening at least two bank accounts. One should be used to receive rent, and another should hold the security deposit, assuming you collect it.
If you are converting your home to a rental: - It's often a great idea to convert your house to a rental property, aka a “house hack.” You probably have a favorable financing term and know the unit well. You need to know a few extra things when doing this.
Your homeowner insurance is probably no longer valid once your property becomes a rental. Talk to your insurance agent to get a landlord policy. While at it, you may want to ask about an umbrella policy. It’s very affordable, and the coverage is pretty good.
Make sure to change the delivery address for all your mails. The sooner you do this, the better, as it takes time, and there’s always some mail you forgot to change over. There’s no guarantee that the resident will let you know. Mail forwarding works pretty well in most cases but is not perfect or permanent. Also, don’t forget to contact the assessor's office to change the mailing address.
Get the house ready—Even if you think the unit is in good shape, you want to double-check things you may not usually do. For example, they might check to ensure that all the alarms are in operation, located in the right place, and not too old. You may also want to lift all the double-hung windows to ensure they stay up and the locks work.
Study the market—You must know how to set the rent amount. Some websites allow you to enter an address and see the rent. That sounds great, but I recommend more in-depth research, as the results can be hit or miss.
Know the laws – Yes, you are a good person, but you may accidently break the law without knowing the laws. This means understanding all the rules and regulations at the federal, state, county, and city/village levels. Also, knowing the current laws is insufficient, as new ones can appear. You must be on top of the ever-changing landscape of the rules and regulations.
Screening services - Many companies can screen tenants for you. However, before using those companies, you must be screened to ensure you will properly use sensitive information. This could take some time, so get the ball rolling while the unit is still not listed.
Screening criteria – Once the unit is listed, you will get a call asking about the rental criteria. You want to be able to answer the question without violating any of the federal, state, county, and city/village laws. Also, you want to know if you allow dogs or cats. If so, how many? Does your HOA allow a pet, if any?
Rental license—Some cities and villages may require a rental license. You can find out by calling. Sometimes, the village will require an inspection.
HOA requirement – If your unit does not have an HOA, you can skip this section. But if you do, you want to contact HOA to see the rules. They can be a minimum of 12 months lease or MAXIMUM or 12 months lease. They may ask you to pay some fees. Or send the lease agreement. Or complete a lease package. The HOA may not allow a rental or only allow it in certain cases.
Equipment – Even if you plan to hire out all the work to a 3rd party vendor, keeping a few things in your car is still a good idea. They could be a battery checker, snake, screw drive, batteries, tape, shoe cover, etc.
Change the locks – Even if you are about to rent out your unit, it’s still a good idea to change the locks. The best thing to do is to change the locks now and right before the resident moves in. You can hire a locksmith to change the locks, but I'd rather do it myself, as it’s faster and cheaper. You can use a two-cylinder deadbolt from Kwikset. The benefit is you can have one master key that goes to the top cylinder to unlock, and the resident can use the bottom lock to unlock. When the resident moves out, you can rekey the bottom cylinder. Another option is landlord locks, which I personally use. They’re a bit more expensive, and you must order online or by phone, but I feel the locks are more robust. I also like the idea of changing out the “core” of the lock in just a few seconds!
Bonus 1 – No need to have 2 locks (entry knob and deadbolts) for your door. Just change the entry knob to the passage knob, so you only have to deal with one deadbolt per door. It has the added benefit of not getting a call from the resident that he locked himself out!
Bonus 2—Talking about lockouts, I had a very “creative” resident who locked the screen door of the front door, got out of the garage, and closed the garage. He locked himself out. You may want to think about removing the lock from the screen door. The screen door is not really for security.
Spend some time with experienced rental property owners - You can learn so many things from them, and it’s always nice to have someone you can contact when you have questions. Joining a local REIA group is a great option for meeting other real estate investors. Also, you can join some online groups to learn more about managing properties. Trust me, you will never know everything, and you can always learn and improve your business.
I hope you learned a few things from this guide and feel more prepared to navigate the world of rental property ownership. Being a landlord comes with challenges, but it can be a rewarding and profitable journey with the right preparation and mindset. I wish you the best of luck on your path to success!
