Before renting out a house for the first time, find out what other first-time landlords wish they knew before they started and how to avoid making the same mistakes.

The Beginner's Guide To Renting Out Your House: 7 Mistakes To Avoid

Belong often encounters people who feel like they “got it wrong” the first time they rented out their home, or took on more than they bargained for. As a company who works with homeowners who are looking for a better alternative to self-managing a rental or are ditching property management, we hear a lot of gripes! Things like “I didn’t realize I would be taking on another part-time job”, or “I wish I had known my insurance policy wouldn’t cover my home when I moved out”.

With a little know-how, you can avoid these mistakes by having a plan before you put your home on the rental market. To get a head start on what first-time rental owners wished they knew before they started, we have compiled a list of 7 common mistakes and how to prepare for them (or avoid them entirely).  

7 mistakes to avoid when renting out your home

Before you take the plunge and list your home as a rental, heed the mistakes of other first-time rental homeowners. Here are 7 mistakes first-time landlords often make and how you can be better prepared. 

1. Not factoring in how much time it takes to manage a rental home

Are you ready for the workload of managing a rental home? This is the first question you should ask yourself before taking on the job. Rental homes are seen as an opportunity to earn passive income, yet the amount of work required is anything but! Self-managing a rental home can be like having a new part-time job.

If you’re not up to the challenge of finding the right people to live in your home, fielding calls at any time of day or night, fixing leaky taps and broken garbage disposals, or chasing down rent every month — you should find someone to help. This could be from hiring a property manager or a modern alternative like Belong. This lets you outsource everything from placing residents to collecting rent and dealing with legalities like lease agreements.

Discover Belong: Get great residents and guaranteed rent paid like clockwork. We’ll determine how to achieve your financial goals and then set out to help you achieve them through passive income. Learn more on our homeowners page. 

A common mistake that rental homeowners make is not to establish separate bank accounts and bookkeeping for their rental home. This means that expenses become muddied with your own personal finances, making bookkeeping and tax time a headache.

The IRS treats rental homes like a business, so from a financial perspective, you should too. Even if you once lived there, when you put it on the rental market, it’s time to create a separate identity for the home. This means a fresh bank account too. Keeping personal and rental accounts separate will provide clarity, simplify your record keeping, and make reconciliation much easier.

For the full rundown on how to establish your accounting for a house that is going on the rental market, check out How to Manage Accounting as a First-Time Landlord: 5 Best Ways.

3. Not having a plan for when rent goes unpaid

Every year millions of Americans are behind in their rent. Which also means that millions of homeowners are chasing down payments while their rental income has stalled. Without income, it won't take long for that cash flow to stop looking healthy.

How your house is managed will determine what your options are in this scenario:

If you self-manage your home, you will need to check local jurisdictions for rules on grace periods. Once you have confirmed rent is late and in violation of your lease agreement, you will need to notify your resident and ask for payment. Keep a record of all contact and serve a written notice to support your documentation. The next step is to issue a notice to “pay-or-quit” their lease, in which case you will need legal support as this is the first step toward eviction.

If you hire a property manager, they will manage the issuing of notices on your behalf and do the legwork for following up on rent. Check the fine print on your agreement, as terms will vary on whether the company will pay your rent when it’s due or when it’s received from the tenant. If it comes to the point where you need to evict, they will also guide you through this process, but be aware that most charge for this service and that eviction protection is often capped at around $500 in costs to file notices.

If you partner with Belong, this will never happen! Belong vets  residents and approves them for guaranteed rent, which means we pay rent on schedule, even if they don't. If the worst happens and a resident needs to be evicted, Belong will cover homeowners with up to $15,000 in eviction protection.

Related: How To Avoid Costly Evictions With Belong’s Game-Changing Safety Net For Homeowners

4. Not taking out the right insurance for a rental home

No one wants to be caught out in an emergency or disaster, which is why we have insurance. But what happens when that insurance isn’t enough? Many homeowners don’t realize that when they put their house on the rental market, their existing policy no longer covers them for everything they need.

This is because homeowners insurance only offers protection for owner-occupied properties. To cover a tenant-occupied home, you need specific landlords insurance. This extends coverage to include liability and damages that could arise from residents.

Renters insurance is different again, held by tenants to cover their own possessions and liability — not you or your home.

So if you move out to rent, buy an investment home, or rent out a house you have inherited — it’s time for a new insurance policy. If you are a homeowner and have a house on the rental market, you will need both types of insurance — one for your home and the other for your rental.

Read More: What Type of Insurance Should I Get For My Rental Property?

5. Not budgeting for rental home expenses and mishaps

To determine how much it will cost you to run a rental home, begin by identifying and calculating your fixed costs. Things like mortgage repayments, insurance, taxes, HOA fees, and rental licenses or inspections. These fixed amounts will account for most of the costs of being a landlord.

Then there's the cost of managing the home. Either budget for help here (~8 - 12% of your monthly rental income) or create your own budget for marketing, screening and other costs related to running the property. If you are paying a property management company, make sure you have a full understanding of the costs you’re likely to incur. Many of them hide in the fine print such as lease renewal fees, vacancy fees and early termination fees. For example, if you are being lured by a 6% monthly fee, do the math on the extra costs. Once they add up, you could find it washes out to 10%+. 

Lastly, there's maintenance and repairs. This is a budget line item you don't want to ignore. Because small leaks can turn into flooding. A felled tree can create security risks or costly roof damage. 

To avoid being caught short, Belong provides peace of mind and protection against unexpected budget items. We provide flexible finance options, letting you spread the cost of big expenses over the term of your resident’s lease. It's a simple way to fund expenses and manage your cash flow.

Related: How Flexible Payment Options Are Unlocking Positive Cash Flow

6. Not running an accurate cash flow analysis 

If you take your rental income, minus your mortgage repayments, that’s the cash flow, right? Unfortunately not! For an accurate rental property cash flow analysis, you’re going to need to do some math.

How to calculate cash flow on a rental property:

Determine how much income your house produces, i.e. rent and any other payments such as services provided or storage charges.


Deduct the weeks/month when your home is vacant (or make an allowance for potential vacancies at the end of a lease).


Figure out your gross rental income, which is rental income + additional income – vacancy rate = gross rental income.


Tally current and predicted expenses from management fees and maintenance costs to property taxes and local utility fees like garbage disposal. This will determine your gross operating expenses.


How much you earn on a rental after expenses is the ‘net operating income’ or NOI. Take the figure from step three (gross rental income) and subtracting the figure from step four (gross operating expenses).


The final step in your rental home cash flow analysis is the amount of debt you need to repay against the home. This could be your mortgage repayments for the year or home equity loan repayments.

For example, if your gross rental income is $36,000 a year and your gross operating expenses are $4,000, your net operating income = $32,000 per annum. If you had mortgage repayments of $18,000 per year, your final cash flow figure would be $32,000 - $18,000 = $14,000 per year in cash flow (or $1,116 per month).

You can find a more detailed breakdown of these steps and calculations in How To Do An Accurate Rental Property Cash Flow Analysis. You can also take our quick rent estimate to see how much you might earn on your rental home with Belong. 

7. Not being familiar with local laws and rental ordinances

Did you know that tenant-landlord laws vary from state to state? Depending on where your house is will have an impact on how you manage your home as a rental. For example, some parts of California are subject to rent control laws. In San Diego you need a permit to use the home as a short-term rental. Many states have even legislated approved reasons to evict a resident from the home.

Your home's location even impacts the documentation you’ll need and when/how you need to dispose of it due to privacy legislation.

This means that before your house goes on the rental market, you should be looking at your local government websites to ensure that you’re up to date with laws and responsibilities that will impact you and your residents. This is another area where a property manager or alternative can help, by providing local expertise and reducing your liability by handling communication and the day-to-day decisions. 

Related: 11 Legal Mistakes To Avoid As a Rental Homeowner

Get great residents, eviction support and guaranteed rent

Millennial renters have peaked. As Gen Z floods the rental market, it’s time to look at their wants and needs to future-proof demand for your rental home.

What Gen Z Wants: A Homeowner’s Guide to the New Wave of Renters

Millennial renters have peaked. As this generation hits their 30s and 40s, Gen Z is now the only generation adding renter households to the market.

Learning what drives young adults is a smart play for rental homeowners of any age. As Generation Z (or Zoomers) enter the rental market, it’s time to look at this cohort’s wants and needs to determine what your home and marketing efforts need to keep demand high. 


Born between 1997 - 2012 (aged 12 - 27), the over 18’s of Gen Z are already renting and offer a glimpse at the future. According to Statistica, Zoomers accounted for ~22% of rental applicants in the US in 2020. By 2030, Gen Z will dominate the rental market as they make up all adults under 35.

They are the most tech savvy of any generation – even the oldest Gen Z’s were only 10 when the first iPhone launched.



Gen Z adults don’t pick up the phone. Most have never written a check. The option to manage a rental home and accept payments online is becoming essential. 



Gen Z are often attracted to suburban living over big-city life, with many dreaming of a single-family rental home. A NAAHQ survey found that 43% of adults aged 18-23 were seeking to swap an apartment for a SFH after graduation.



About two-thirds of adults under 35 live in rental homes. By 2030, Gen Z will be 18-35 and the majority of renters. 



1 in 3 Gen Z adults think homeownership at any point feels out of reach financially and 72% appreciate the flexibility of renting (Freddie Mac, 2022).

Understanding what this generation wants from a rental home is a great way to stay ahead of the pack during the ebbs and flows of the market as time goes on. Here are 5 things Gen Z renters want in a home so you can focus on what will drive demand today and in the future.


According to the Freddie Mac survey, 78% of Gen Z adults want air conditioning in a rental home – topping their list of priorities. This should come as no surprise with temperatures rising across the globe. 

Cooling is also on the agenda for tenant rights. At the moment, homeowners have to provide heating for a comfortable living environment. A number of campaigns across the country including New York, Arizona and Florida are looking to have cooling included in this to tackle heat stress in rental homes. 

2. High-speed internet and WFH flexibility

Gen Z are starting their careers at a time when a hybrid model of working from both home and the office has cemented itself in modern workplaces. 

This (and their insatiable appetite for online video content) makes fast internet and flexible spaces a must. 75% of Gen Z adults say a rental being ‘wired for high-speed internet’ is a top priority. 

It could be as simple as ensuring there are enough outlets for laptops and chargers or installing a wifi extender such as Amazon’s eero or Google’s Mesh wifi. 

Other ideas include adding a floating desk that folds out in a common area or highlighting home office features in your home listing. 

Related: How Remote Work Trends Are Impacting Rental Demand

If you want to keep Gen Z residents, don’t make them pick up the phone to report maintenance issues. Let them pay rent online. Respond fast. This is a true digital native generation and they’re looking to innovative proptech solutions to make their rental experience better than past generations. 

As a company on a mission to upend the outdated property management industry, Belong focuses on innovation and human-led services that support everyone. 

Here are five ways we’re making renting lovable for Gen Z (and everyone else!)

Our residents can choose their rent payment schedule, paying via the app on a cycle that suits their income. We guarantee rent to all homeowners monthly or yearly, so you get paid the same no matter what your residents choose. 



Our customer support teams are available to residents 24/7 via the app so they never have to make awkward phone calls or wait until business hours to discuss their needs. 



Belong residents are rewarded for every on-time rental payment by building up credit towards priority access to future rentals or even buying an eligible home on the Belong network in future.  



We include video in our rental listings (no hidden fees), to appeal to the video-loving Gen Z market. 



We don’t call renters ‘tenants’ or treat them like second-class citizens. We prefer residents and respect that they want a place to belong. 

Related: 9 Ways Belong Flipped Property Management on its Head

Gen Z has grown up with Siri, Alexa and Google at their fingertips. They want to use their phone to control their world and appreciate smart appliances for their easy of use and cost-saving potential. 

A 2022 survey from Rent.com found that 82% of renters already want at least one smart device or system in their home. Expectations aren't wild either — 41% say 1-2 devices would be their preference.

Cost-effective picks that can benefit both homeowners and their residents include:

Smart smoke and carbon monoxide detectors

Related: What Smart Home Tech Do Renters Want Most?

Growing up with climate change hitting crisis point, Zoomers are more likely to be environmentally conscious than other demographic segments. Research suggests that 61% of renters would pay more each month in rent for an eco-friendly apartment, which likely applies to single-family homes which cost more to run. 

You don’t need to be an eco-warrior to know that running an energy efficient home makes sense. The energy use in our home has a big impact on our utility bills, but it’s also the top contributor for our individual carbon footprint. Home energy accounts for almost a third (32%) of the average American’s carbon footprint. 

For years, sustainability measures have targeted homeowners, leaving renters to put up with emission-heavy homes. It’s unlikely that Gen Z will let this continue. Imagine you’re a Gen Z renter choosing between two similar houses. One has energy efficient upgrades, the other untouched — which would you choose? 

Related: 7 Cost-Effective Ways To Make Your Rental Home Sustainable

Another finding from the Freddie Mac survey was that 69% of Gen Z adults prioritized wanting to rent in a “low-crime neighborhood”. Now, you can’t help what happens around your rental home – but there are ways you can make residents feel safer, including:

Installing deadbolts and security gates to reduce the risk of break-ins

Respond quickly to repairs and damage to the home to reduce unauthorized access

Provide a lockable mailbox to protect against mail fraud and identity theft

Provide good lighting in and around the property, especially in common areas such as hallways, staircases, and parking lots

Change the locks after evicting a nuisance or violent tenant

Develop a security plan to respond to threats and install security measures as needed

Related: Criminal Activities in Rentals: Can Landlords Be Held Responsible?

Is a rental home a good way to earn passive income? This quick guide answers 5 FAQs on earning passive income from a rental home and the US tax implications.

Your Guide To Earning Passive Income On A Rental Property

Earning money without the daily grind sounds pretty idyllic for most. This is the motivator behind passive income – earning money without doing a lot of work to achieve it. Of course, in finance, nothing is that straightforward. 

Passive income is a complex topic, particularly in property rentals where the market is always changing. While there are no hard and fast rules on how to earn passive income from a rental home, this quick FAQ guide will help decipher five big questions.

5 FAQs on earning passive income on a rental home

1. What is passive income in real estate?

In theory, passive income is money that you earn regularly, without doing too much actual work to get it. This shouldn’t be confused with things like owning shares or crypto – that is called “portfolio income”. Passive income is different. It’s an income-producing activity and you may do a little work to achieve it, but it’s different to the way you earn your wages or what’s known as ‘active’ income. 

In real estate, passive income examples include:

Rental income from a long-term or short-term rental, managed by you or a property manager



Returns from a Real Estate Investment Trust (REIT) that owns and manages properties on behalf of a group of investors



Renting out a spare room or an ADU to generate income

The type, hours of work, and method for managing your real estate investment will impact whether this is classed as passive or active income, which we will get into next. 

2. Is my rental income passive or active income? 

Whether your rental home generates passive or active income will depend on your individual circumstances. It’s always a good idea to speak to a financial advisor or accountant before making any financial decisions, as there is no one-size-fits-all answer here. 

For most long-term rental homeowners, your income will be considered ‘passive activity’ by the IRS. It means you can claim tax deductions for related expenses against this income, but any losses need to carry forward until you generate passive income or sell the home. 

There’s also what’s known as “active participation” in a rental home. The IRS takes into account that you spend time making major decisions about your home. Even if you outsource the heavy lifting to Belong, you could still qualify as the person appointing management of your home and approving residents and expenditures. 

If you’re found to actively take part in these decisions, you may be able to deduct up to $25,000 of your passive losses. There are income thresholds and caps on deductions here so you will need to speak to an accountant to determine if you qualify for this. 

If you’re self-managing the home, keep a close eye on the hours you work. If you spend more than 750 hours on your rental home or related businesses in a year, it’s likely the IRS considers you to be a ‘real estate professional’ for tax purposes. In this case, your income isn’t passive income. Same if you flip houses for profit, as this is an example of active income. 

3. Is renting out a home a good way to make money? 

It definitely can be. Rental homes have the potential to be a good investment and some people even manage to live off their passive rental income. But the truth is, no one can predict how much money they will ever make on any investment. Real estate, shares, and portfolios, crypto – for every reward comes risk. 

But Belong has a very different vision for the US housing market than the one that currently exists. One where homes are in the hands of real people, not corporations. Helping homeowners to achieve their financial goals through real estate and to help those who rent to find a sense of belonging in the houses they call home. 

This is why we’re focused on disrupting the way long-term renting works. For too long, both homeowners and their residents have been let down by property management companies. Renters are treated like second class citizens while the owners of rental homes are left frustrated by hidden fees and poor communication. It shouldn’t have to be this way. 

There are so many far-reaching benefits for both homeowners and the wider community when you opt to rent out a home on a long-term basis. Belong wants to bring back confidence to homeowners to choose this option to achieve financial freedom. And make sure you can do it without having to lift a finger.  

To do this, we partner with homeowners to determine financial goals. We guarantee rent and give you transparency over how your rental income is working to achieve them. We offer innovative financial solutions to spread the cost of expenses and keep your cash flow steady. And we put everything you need at your fingertips with an easy-to-use app.  

4. What is the tax rate on passive rental income? 

How you are taxed, along with any deductions and benefits you’re entitled to, varies depending on how your property is treated on the rental market and how much time you spend in the home.

For this example, let’s say the home is a long-term rental and residents live there full-time on a 12 month lease. Any income earned is reportable on your tax return and you will be able to deduct expenses based on the percentage of days in the year that the home was rented out. 

Rental income tax works on your marginal tax bracket. As the United States uses a progressive tax system, your tax rate will increase as your income grows, ranging between 10% and 37%. 

You can also lower your tax burden or the amount of money you will owe at the end of the year by claiming certain deductions on your tax return. Rental properties attract many strategies that can help lower your tax liability, so good record keeping is essential. Don’t forget that federal income tax isn’t the only thing to consider when owning a rental home. There’s also property taxes, state taxes, capital gains, maybe even estate taxes for an inherited home. It’s all dependent on your personal finances and situation which is why it’s best to speak to a financial or tax advisor. 

Read More: 2024 Federal Tax Brackets on Rental Income: A Guide for Rental Home Owners

5. Is an inherited home considered passive income? 

If the home you inherit is rented, that income will be considered your passive income and can be financially beneficial.  

Besides enjoying passive income, the IRS will consider the value of the home on its current market value, known as a "stepped up basis." This means that when it comes to capital gains tax if/when you do sell the home, the appreciation will be based on the value that you inherited it at. This is a big difference to if you were to buy an investment property for yourself, where appreciation will be based on what you paid for the home. You can learn more about the tax considerations for inherited homes here. 

Reach your financial goals with guaranteed rent

Belong is simplifying the rental experience and helping more homeowners reach their financial goals through real estate. Tell us about your rental home now to get started.

You can also visit our homeowner's page to learn more about how our modern, tech-enabled services are helping people ditch property management in cities across the US including Austin, San Antonio, Tampa, Raleigh/Durham, Dallas/Fort Worth, Houston, Miami and more. 



Disclaimer: It’s important to consult with a professional and consider your personal financial situation, local microeconomic factors and other risk factors before choosing to invest in real estate. This article should not be considered financial or legal advice.

Your Guide to Earning Passive Income on a Rental Property

What are the pros and cons of using AI in property management? Discover where AI can streamline tasks for your rental home & where human touch is irreplaceable.

Could AI Make You a Better Rental Homeowner?

Love it or loathe it, machine learning and artificial intelligence (AI) is starting to infiltrate every industry. Property management is no exception. Owning and managing a rental home can be a big job, so naturally many rental homeowners want to know if AI would be a help or hindrance. 

The answer is that it can be both. There are pros and cons to using any kind of AI in managing a rental home. If technology can make your work more efficient, that’s great! But it shouldn’t come at the cost of good support for your residents. 

Here are some examples of 6 pros and cons of AI at work in the rental management industry. 

One of the major benefits of AI is the ability to process huge quantities of data. This can provide great insights when marketing or managing a rental home. Here are three useful benefits of using AI to process and use data for a rental home. 

1. Machine learning and pricing algorithms

Pricing in the real estate industry fluctuates with supply and demand. Data scores from bedrooms and square footage to local amenities, school districts, and seasonal demand – all influence pricing on a monthly basis.  

Machine learning can be a huge benefit in harnessing this data. AI allows property technology (PropTech) companies to create pricing algorithms that increase rental income without turning potential residents away. 

As a tech-forward alternative to property management, Belong uses expert pricing algorithms to create rent estimates for our homes. We look at thousands of neighborhood data points along with amenities that make your home unique. We also track real-time demand to get the best possible price for your rental home and use human smarts and local-market knowledge to make sure it’s spot on for the current conditions. 


Try it out: Get your own free rent estimate to see what you could be earning with Belong. 

2. Predicting what your rental home needs

Your rental home creates its own data that can tell a story. Things like how old the home is, when appliances were last replaced, how often the lawn needs mowing. AI can process these data points quickly to make predictions on upcoming maintenance needs for your rental home. Smart appliances can also alert homeowners to maintenance issues such as detecting leaks or carbon monoxide in the home. The future of AI could be incredibly useful in a smooth-running rental that predicts necessary maintenance and appliance replacements before it turns into a costly repair.

Related: The Future of Property Management: 5 PropTech Innovations Changing The Game

Technology helped us move from shoeboxes full of receipts to organized spreadsheets and automated number crunching. AI has the potential to streamline this even further. AI powered automation programs can predict when you need to enter information and can help you track things faster. For example, if you manage your own rental home, an automated tracker in your car can record mileage every time you visit the property. If this is sent to your accounting software, it will make tax time a breeze.

Related: How to Manage Accounting as a First-Time Landlord: 5 Best Ways

Not every use for AI will be helpful. It’s important to remember that most of what is called AI is a human-language model. This means it mimics human language to give you the answer it thinks you want to hear. Even if that means making it up. It’s far from foolproof and could steer you or your residents in the wrong direction. 

Your residents are human and your rental is their home. This is no ordinary business transaction and replacing communication with robotic responses isn’t likely to do anything to improve the tenant-landlord relationship. 

Here are three instances where AI could be less than helpful for your rental home. 

Communicating with your residents is basic customer service. While chatbots are sounding less robotic thanks to AI, at the end of the day, they are still robots. 

Outsourcing your tenant communications to a chatbot is risky. It will give the answer it thinks they need with no care for your home or residents. Some property management companies may promote this as “instant communication”, but if anything it is delaying real support. Looking after your residents is a service that should be included in the management fees paid. 

At Belong we take pride in being the perfect blend of technology and people-power. This includes access to human customer support, 24/7. Our easy-to-use but advanced app is not a robot spitting out generic answers, connecting you to teams of real people dedicated to caring for your home.

When listing your home, you could use an AI language model like ChatGPT or Google’s Gemini to write the listing for you in minutes. That’s fast, but you should also proceed with caution. Don’t take AI at its word. AI text can be unnecessarily wordy and may include generic things that aren’t relevant to your local area or home. You will also need to check for potentially discriminatory language that could land you in hot water under the Fair Housing Act. It might be a good starting point, but be sure to proofread and edit carefully before uploading to listing sites. 

As a homeowner there’s a lot of legislation to navigate – and landlord-tenant laws change often. A google search will produce thousands of results, so it could be tempting to ask your questions to an AI chatbot. This is not a good idea. The last update for ChatGPT was in January 2022, and many new rules have been introduced since then like caps on security deposits in California or the eviction process in Seattle. Bing search has been found to make up answers and scrape responses from top-ranking websites, without accounting for the date they were published or whether the author has verified any of this information. 

Even when accurate, AI gives generalized advice and may not be aware of local ordinances in place for your local county. Better leave this one to the experts and consult an attorney, property lawyer or real estate professional. 

If you’re looking for the tech-forward alternative to old-school property management, you’ve found it. Belong is a proptech company on a mission to fix long-term renting by focusing on modern innovation and services that support everyone. 

We’ll partner with you to get your home the best price, guarantee your rent, and care for it the way you would. Never worry about bad residents, late rent, cost blowouts, or 2am phone calls ever again. 

See why thousands of US homeowners are ditching outdated Property Management in San Francisco, Austin, San Diego, Los Angeles, Tampa, Jacksonville, Orlando and more.



Disclaimer: We don’t enjoy using the word ‘landlord’. We prefer to refer to members in our network as homeowners and residents, not landlords and tenants, since we’re on a mission to upend and redefine the traditional landlord-tenant relationship. That said, sometimes the words tenant and landlord need to be used to provide clarity on legislation — so in this article we use both. This article provides a guide for homeowners of residential property for rent in the US, but should not replace financial or legal advice. Please consider your own personal circumstances and consult a legal or real estate professional before making any decisions on your rental home.

Creating a lease or rental agreement isn't as simple as downloading a form. Before you start, here's 7 important clauses and disclosures you'll want to include.

7 Important Clauses to Include in Your Lease or Rental Agreement

There’s no shortage of free online templates to create a simple lease agreement. And we get the temptation this gives to homeowners managing their own rental. Few people love reading lengthy contracts let alone creating them. If they’re all pretty standard, why not? 

But before you go down that road, remember this: a lease is a binding legal document designed to protect you and your rental home. Will a boilerplate take enough into account? Overlooking vital details could come back to bite you down the road. It’s always recommended that you speak to a local attorney before signing on any dotted lines. 

Whether you’re planning to outsource the 'legalese' or hit download on a template, here's 7 important clauses and disclosures that should be in your lease or rental agreement.

Only the people named on your lease agreement are legally responsible for paying the rent and following the terms. This is why all adult members of the household need to be listed. Partners, roommates — get it in writing. Include an occupancy clause that states that only the named tenants and their children can occupy the home. A clause should also prohibit subletting and unapproved occupants to further protect your home from unauthorized use, particularly on short-term rental platforms that may violate the terms of your landlord's insurance policy. 

2. Payment terms for rent and security deposit

Your lease should obviously list the agreed rental price and security deposit amount. But you can avoid messy disputes by detailing the specific payment terms. Your lease agreement should include details such as:

When rent is due and the frequency of payments

What will happen if the rent is late (including details of fees if they apply in your state)

What will happen if a check bounces or payment declines

The amount of security deposit due and where it will be held

Whether interest will apply on the security deposit, based on local laws

The terms in which the security deposit will be returned 

Every state and jurisdiction is different, which is why it’s important to seek professional help for legislation around rent and security deposits. For example, in California a security deposit can’t exceed two months rent, but it’s limited to one month if the tenant is an active service member. In Texas, there is no limit applied. In Washington state, you must allow tenants to pay the deposit in installments if the amount is more than 25% of the monthly rent. There isn’t a one-size-fits-all approach to drafting a lease for renting in the US. 

3. Policies around proper use of the home

How you want the rental home and surrounds used should be clear to tenants before they move in, avoiding headaches down the road.  

For example, if you have parking for one car, spell that out. Don’t assume that your residents won’t use the lawn to park their partner’s car or store an RV if you haven’t told them they can’t. A boilerplate won’t have any specifics relating to your home, so these details will need to be considered carefully.

When Belong drafts a lease agreement, we make sure to include specific policies and permissions including:

The responsibilities of the resident for maintenance and reporting faults, including what they need to replace themselves, such as light bulbs

Authorized and/or prohibited parking on the property

Storage notice for personal use only, not storage for other people or hazardous materials 

An outline of who is responsible for paying for utilities and services to the home

Legal use of smoke detectors and carbon monoxide, plus reporting and maintenance requirements

Garden maintenance and watering requirements as applicable to the home

A no smoking policy, prohibiting smoking and vaping in the home and common areas

A drug policy, prohibiting the use, growing and distribution of drugs, marijuana or related products on, in or about the home

A policy for requesting any alterations around the home, including painting

Local conditions in the neighborhood, such as city noise restrictions

Early termination penalties if the resident wants to move out before the end of the lease

A pest control policy including the residents' responsibility to keep the home in a clean and sanitary condition (with pest control costs applicable for failing to do so)

Resident obligations upon moving out including key return, removal of personal items, cleaning and providing a forwarding address

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4. Statutory disclosures for your local area

Depending on where your home is located, there could be a number of legal disclosures you are required to include in a lease agreement. For example, if your home is in the state of California, you are legally required to include:

A ‘Megan’s Law’ database disclosure statement

Disclosure of any known mold or ventilation issues in the home and agreement to keep the home free of mold and mildew

A lead paint warning statement and disclosure of any known lead-based paint or hazards in the house (for homes built prior to 1978)

Any known contamination from methamphetamine of fentanyl 

Information about bed bugs and reporting requirements

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