It’s an exciting and rewarding business being a landlord in Orange County, but it’s not without considerable responsibilities. It takes being landlord-aware of the responsibilities day one, from preparing your property to accept tenants through navigating the local regulations and handling money.
If you require an Irvine property manager, Anaheim property manager, or Huntington Beach property manager, we can guide you through your first rental experience and ensure you remain compliant. We work for all of Orange County.
We’re going to take you through the key steps every new landlord must do, so you’re well prepared for an easy, prosperous rental experience. By performing these steps, you’ll be on your way to achieving passive income and long-term value appreciation. Let’s dive in!
Key Takeaways
- There are important steps every first-time landlord should take to ensure their rental property is successful.
- Getting your property ready for rent involves addressing necessary repairs, making aesthetic upgrades, and ensuring a deep clean to attract quality tenants.
- Setting the right rental price through a comparative market analysis is crucial for minimizing vacancies and maximizing returns.
- Thoroughly screening tenants and understanding landlord-tenant laws helps protect your investment and ensures a positive rental experience.
Table of Contents
- Step 1: Get Your Property Ready for Rent
- Step 2: Determine the Rental Cost
- Step 3: Budget for Fixed and Variable Costs
- Step 4: Purchase Landlord Insurance
- Step 5: Learn About Orange County Landlord-Tenant Laws
- Step 6: Market Your Property
- Step 7: Screen Tenants
- Step 8: Prep and Sign the Lease Agreement
- Step 9: Collect Rent
- Step 10: Rental Property Management and Financial Reporting
- Download Your Free First-Time Landlord Checklist
- First-Time Landlord FAQs
Step 1: Get Your Property Ready for Rent
Prepping your property for rent is the first step for any first-time landlord. Whether you already own a property or you’re looking to purchase a new property, it’s important to get your property ready for tenants to move in.
When we work with first-time landlords, they often think once they’ve got a property, they’re ready to list. But that isn’t the case. You need to spend some time getting your property ready to ensure your property doesn’t sit on the market for too long.
Kick things off with a thorough inspection of the property. Check all essential systems, like plumbing, heating, air conditioning, electrical and HVAC, and all appliances, like the refrigerator, oven and dishwasher, are in working order. Make sure there are no leaks, mold issues, or appliances that are working. If you come across any issues, address them before listing your property for rent.
Once you’ve tackled the big stuff, you can turn your attention to some aesthetic changes. Fresh paint, updated light fixtures, and patching small holes can give your property the facelift it needs to attract the right tenants. You could even go so far as making small upgrades like replacing outdated curtains or upgrading the cabinet hardware—these small changes can make a big visual impact.
Finally, it’s time to give your property a really good deep clean. Go through the property from top to bottom and ensure everything is as spotless as it can be. From the windows to the baseboards, you should have the entire property cleaned before anyone moves in.
Step 2: Determine the Rental Cost
Setting a fair market rent for your property is a critical, and often intimidating, step for any first time landlord. Pricing your property correctly can help attract high-quality tenants, minimize vacancy periods, and maximize your return on investment. The best way to set rent is using a comparable market analysis (CMA). A CMA looks at four factors:
- Rental properties with similar square footage, number of bedrooms, and amenities.
- The property’s location.
- The age of the property.
- The condition of the property.
By looking at properties in your area with similar characteristics, you can start to understand what other properties are renting for. With this information, you can set a competitive price that will not only attract tenants, but will also give you a good ROI. It’s important to look at what’s on the market, but in our experience looking at what’s recently leased gives a clear picture of rent rates that actually get leased. If you see a comparable property but it’s been on the market for over a month, it may be priced too high.
Step 3: Budget for Fixed and Variable Costs
As a landlord, you need to understand the costs and create a realistic budget for both unexpected and recurring expenses for the property. A budget that plans for emergencies can help ensure your rental property will be financially sustainable.
Fixed Costs:
- Mortgage Payments: If you have a mortgage on the property, this will be one of your largest fixed costs.
- Property Taxes: Property taxes in Orange County are based on the assessed value of the property and are typically due twice a year. They are a fixed cost, though they can increase over time as the property’s value rises.
- Insurance: Homeowners insurance or landlord insurance is essential for protecting your investment.
- HOA Fees: If your property is part of a homeowners association (HOA), you’ll need to account for HOA dues.
- Property Management Fees: If you hire a property management company, their fees are usually a percentage of the monthly rent (typically around 8-10%).
Variable Costs:
- Maintenance and Repairs: These costs can fluctuate depending on the age of the property and the condition of appliances, plumbing, electrical systems, and more. Regular maintenance—like landscaping, or pest control—is a recurring cost, while larger repairs—like roof replacement, or appliance repairs—can be less predictable.
- Utilities: If you’re responsible for paying certain utilities, these costs will fluctuate based on usage and the number of tenants in the property.
- Vacancy Costs: A property’s vacancy period can vary depending on market conditions and tenant turnover. During vacancy, you’ll need to cover mortgage payments, insurance, and utilities, but won’t be receiving rental income.
- Legal and Administrative Costs: While generally low, legal fees (for evictions, lease agreements, etc.) and costs for advertising and tenant screenings can vary depending on the specific situation.
Step 4: Purchase Landlord Insurance
You shouldn’t even consider renting your property before you have landlord insurance. Landlord insurance is designed for landlords and protects the property, your personal property, liability, and loss of rental income. Most landlord insurance policies provide protection if your rental property is damaged, becomes unlivable after a fire or storm, or if someone is hurt on your property.
Do your research and look into different insurance providers to find the policy that’s right for you.
Step 5: Learn About Orange County Landlord-Tenant Laws
Learning everything there is to know about landlord-tenant laws in California and Orange County is quite the undertaking. And staying on top of the updates? Well, that can often feel like a full-time job. But the importance of understanding these laws can’t be overstated. As a landlord you need to stay compliant with these laws. If you don’t, you could land in a lot of hot—and expensive—water.
California is a tenant-friendly state, and Orange County is no exception. This means if you fail to follow the regulations in place, you could end up paying costly fines or dealing with a drawn-out legal batter.
Here are some of the laws that should be on your radar as a landlord in Orange County:
- Security deposits: Landlords can only charge a maximum of one month’s rent as a security deposit in Orange County. You’re also required to use photos to document the state of the property when a tenant moves out.
- Rent control: While there are no statewide rent control laws, there are different policies in place in different cities in Orange County. It’s important to know if your city has rent control laws so you can avoid raising rent higher than is legally allowed in your local area.
- Eviction laws: There is a lot of legality that goes into the eviction process. If you’re planning to undergo an eviction, be sure to consult with a real estate attorney to ensure you are following all applicable laws.
- Fair housing laws: The Fair Housing Act and California’s Fair Employment and Housing Act (FEHA) are in place to ensure there is no discrimination in the rental process. Together these laws ensure that no person is discriminated against on the basis of race, religion, gender, disability, and more. Before you start screening tenants, take the time to learn and understand these protections as it will help you create a more inclusive rental process and help you remain compliant.
Step 6: Market Your Property
If you want to find tenants for your rental property, you need to market it. One of the best ways to get your property noticed by a board audience is by listing it on popular online rental platforms like Zillow, Apartments.com, and Craigslist. Your listing needs to stand out in the crowd—be sure to include a detailed and accurate description, highlighting key features such as amenities, location benefits, and any unique selling points.
In today’s market, having high-quality, well-lit photos is important, but many potential renters also expect to see videos or 3D tours. Having the most accurate visual representation of your property will help you make an impression in Orange County’s competitive market.
Effective marketing isn’t just about getting your property out there—it’s about ensuring it grabs the attention of quality tenants who are looking for a place just like yours.
Step 7: Screen Tenants
If you want to rent to tenants who are responsible and reliable, you need to take the tenant screening process seriously. The screening process typically includes:
- Reviewing the tenant’s rental history.
- Checking credit scores.
- Verifying income.
- Conducting background checks for criminal history or past evictions.
- Contacting references from previous landlords to gauge their reliability and behavior as tenants.
Thorough screening helps mitigate risks such as late payments, property damage, or legal issues down the line.
In California, there are specific laws and guidelines that landlords must follow when screening tenants. For example, landlords must obtain written consent from the applicant before running credit or background checks. Additionally, under California’s Fair Housing laws, landlords cannot discriminate against applicants based on race, gender, religion, sexual orientation, or other protected classes.
Step 8: Prep and Sign the Lease Agreement
A well-crafted lease agreement is designed to protect both landlord and tenant. It sets clear expectations and defines the terms of the rental arrangement, including rent payments, maintenance responsibilities, lease duration, and other important rules. Without a solid lease in place, landlords may face disputes over things like late fees, security deposits, or the handling of property damages. A clear and legally binding lease agreement helps minimize misunderstandings and provides a framework for resolving issues should they arise.
To ensure your lease is legally binding and fully compliant, it’s wise to consult with a lawyer or legal professional who specializes in landlord-tenant law. Alternatively, working with a property management company like Good Life can save time and ensure that the lease agreement meets all necessary requirements and protects your interests.
Step 9: Collect Rent
Make sure to clearly specify when rent is due each month. It can be helpful to offer a variety of payment options, like online payments or check. But whatever payment methods you offer, it should be clearly stated in the lease. It’s also important to outline any late fees in the lease agreement, so everyone is on the same page about what happens if a payment is delayed. This way, there’s no confusion, and both you and your tenants know exactly what to expect.
Step 10: Rental Property Management and Financial Reporting
The key to managing your rental property with ease is having a clear system for handling tenant requests, staying informed about local landlord-tenant laws, and addressing potential issues before they escalate. It’s also essential to keep track of all your income and expenses to stay compliant with IRS regulations. This not only helps you minimize tax liability but also ensures you’re maximizing your return on investment.
A property management company can take the hassle out of ongoing property maintenance by handling everything from routine upkeep to emergency repairs, ensuring your property stays in top shape without you lifting a finger. Plus, they can help you keep track of your finances with monthly or annual financial statements, so you always have a clear picture of your rental income and expenses. This makes it easy to stay on top of your investment’s performance and ensures you’re always informed and organized.
Download Your Free First-Time Landlord Checklist
At Good Life Property Management, we understand how stressful being a first-time landlord can be. And we just gave you a lot of information to process. To make it easier, we’ve pulled together a free first-time landlord checklist so you can ensure you tick all the important boxes.
At Good Life Property Management, we believe life should be enjoyed, not spent sweating the small stuff. That’s why we set out to make property management easy. We service all of Orange County, ensuring first-time landlords receive expert support. Whether you need a Fullerton rental property manager, Costa Mesa property management expert, or Newport Beach real estate manager, our team is here to help. We care about you, your property, and your tenant. And we do it all so you can Live the Good Life.
If you need help managing your rental property, schedule a call to speak with one of our Good Life experts.
First-Time OC Landlord Checklist: Free Downloadable PDF
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First-Time Landlord FAQs
What must a landlord provide in California?
All California landlords must provide a habitable living space, necessary repairs, and comply with health and safety codes, including functioning plumbing, heating, and electrical systems.
What are 3 rights landlords have in California?
In California, landlords have the right to set rental prices, require tenants to follow lease terms, and initiate eviction procedures under specific conditions, such as non-payment of rent.
How do I protect myself as a landlord in California?
To protect yourself as a landlord in California, ensure compliance with local laws, use a well-drafted lease agreement, and screen tenants thoroughly to minimize risks.
Steve Welty
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