Your First Year as a Landlord: What Actually Happens

The purchase was the project. Ownership is the job, and it is a different one: mostly administrative, occasionally urgent, and almost entirely decided by how well you screened.

TL;DR: The first year is turn, list, screen, lease, then operate. Written screening criteria applied identically to every applicant are the highest-leverage thing you will do all year — a bad tenant costs more than every other first-year mistake combined. Set up a separate bank account and bookkeeping on day one, document the property's condition before anyone moves in, and expect to spend more on repairs than your model assumed. Budget one full turn and one significant repair even if neither happens.

Weeks 1–4: get it rentable

Do the work before you list, not while showing. A property that shows badly rents slowly and to worse applicants.

Priorities, in order: anything unsafe or non-compliant — smoke and carbon monoxide detectors, handrails, GFCI outlets, locks; then anything that will fail soon and cause damage; then paint, flooring and cleaning; then cosmetics.

Rekey everything the day you close, regardless of what you were handed.

Photograph and video the entire property before anyone moves in, timestamped. Every room, every appliance, every existing scuff. This is your evidence at move-out and it takes twenty minutes. The move-in and move-out inspection checklist is the format to use.

Set the rent from what is being signed, not what is being asked. Overpricing by $75 to sit vacant an extra three weeks is a net loss of several hundred dollars, and you still end up at the market rent.

Weeks 3–6: screen properly

This is the part that determines your year.

Write your criteria down before you take a single application, and apply them to every applicant identically. This is both the operationally correct approach and your protection under fair housing law — inconsistent standards are how discrimination claims arise, including unintentionally. The tenant screening criteria template is a starting structure to adapt with local counsel.

Typical criteria:

Criterion	Common standard
Income	3× monthly rent, verifiable
Credit	Minimum score, plus a look at what the derogatories are
Rental history	2 years, verified with previous landlords
Eviction history	None in a defined lookback
Criminal history	Individualised assessment; follow local law, which varies a lot
Occupancy	Per local code

Two practical notes. Call the landlord before the current one. The current landlord may want a difficult tenant to leave and will say pleasant things. The previous one has no such incentive. And verify income directly — pay stubs plus a bank statement, or an employer call. Documents are easy to fabricate.

Screening slowly costs you a few weeks of vacancy. Screening badly costs you six months of non-payment, a formal eviction, and a damaged unit. The asymmetry is enormous, and every experienced landlord has learned it the expensive way.

Month 2 onward: the lease and the first 90 days

Use a state-specific lease. Generic templates omit required disclosures and include clauses your state does not enforce, and an unenforceable clause is worse than no clause. Have a local attorney review your first one; it is a few hundred dollars once.

Handle the security deposit exactly as your state requires — many states mandate a separate account, specific notice, and a strict return timeline with an itemised statement. Deposit rules are among the most commonly violated and most frequently litigated landlord obligations, and the penalties are often multiples of the deposit.

Set expectations in the first week: how to submit a maintenance request, how rent is paid, when you inspect. Tenants who know the process use it, which is what you want — the maintenance call you never receive is the leak you pay $8,000 for later.

Do a light check at 90 days, with proper notice. Change the furnace filter, look at the plumbing under the sinks, confirm the property is being cared for.

The whole year: money and books

Separate bank account, from day one. All rent in, all expenses out. Commingling with personal accounts makes tax time miserable and undermines an LLC's protection if you have one — see whether you need an LLC for a first rental.

Track by category, monthly. Repairs, capital improvements, taxes, insurance, management, utilities, mileage. The repairs-versus-improvements distinction matters at tax time: repairs are deducted this year, improvements are depreciated. Ask your CPA where the line sits for your situation, and about depreciation, which is the largest tax benefit rental property offers and is claimed automatically whether or not you take it.

Fund the reserve account separately. Move the capital reserve — the 5–8% of rent from your analysis — into a different account each month. A reserve sitting in your operating account gets spent.

Keep a rent roll and a running P&L from month one. The rent roll template works for a single property and still works at ten.

What actually goes wrong in year one

Repairs exceed the model. Nearly always. The inspection found the known items; year one finds the unknown ones. If you budgeted 8% of rent and spend 12%, you are having a normal year.

A tenant pays late. Have a written policy — grace period, late fee, when notice is served — and apply it from the first occurrence. Landlords who are flexible early train tenants that the date is negotiable.

Something happens at an inconvenient time. No heat on a Friday night. Line up a plumber, an electrician, an HVAC contractor and a handyman before you need them, and confirm which do emergency calls. Finding a contractor at 9pm is how you overpay.

You realise you dislike this. Entirely common and not a failure. Hire a property manager at 8–10% of rent plus a leasing fee. Your analysis already carried that expense, so the deal still works — and when to hire out is a decision worth making deliberately rather than at breaking point.

Month 10–12: the renewal decision

Start 90 days before the lease ends — earlier than feels necessary.

A good tenant renewing is worth more than a rent increase. Do the arithmetic: raising rent $75 and losing them means a month vacant plus a $2,000 turn plus a leasing fee, against $900 a year gained. It takes three years to recover that, assuming the next tenant is as good.

So: raise modestly with good tenants, closer to market with mediocre ones, and do not renew the bad ones. Send the offer in writing with a response deadline, using the lease renewal letter template as a base.

The end-of-year review

Sit down with twelve months of actual numbers and compare them to what you underwrote:

• Did the rent match your projection?
• What was actual vacancy?
• What did maintenance and capital actually cost?
• What is the property worth now?
• What is your real cash-on-cash return? Recompute it on the ROI calculator with actuals rather than estimates.

That comparison is the most valuable thing you own after one year. It tells you whether your assumptions were realistic, and it makes the second purchase materially better underwritten than the first. Most investors never do it, which is why they keep making the same estimate errors.

Final take

Screen carefully, document everything, keep the money separate, and fund the reserve as if the roof already leaks. The first year is not difficult so much as detailed, and the details are front-loaded — a good tenant in a well-prepared property makes months three through twelve genuinely quiet. Then take your actual numbers back to the analysis and buy the next one better.