A key component to the buy-and-hold strategy for Texas real estate residential investors is property management. While collecting rent may seem like easy passive income, there are several Texas residential landlord tenant laws and regulations in place for landlords. As a first time landlord, investors may face uncertainty and make mistakes along the way. This guide is designed to point out key issues and considerations for a newly anointed landlord.

First, consider whether you plan on making your property a long term rental (typically 12 months) or short term rental. If you plan on the short term rental route, be sure to review your local homeowner’s association rules also known as declaration, and covenants regarding single family home dwellings. Once you have confirmed it’s acceptable, plan your rental listing platforms, tenant screening process and management process.

For long term rentals you may consider using platforms such as Zillow.com or Apartments.com for online listings. Both long term and short term rentals may be posted on social media market platforms such as Facebook. Additionally, there are short term rental platforms like VRBO or Airbnb. You may also consider listing it on your local newsletter or newspaper. Few residential landlords will also have a physical sign indicating the property is for rent. Lastly, you can go a more traditional route and find a realtor to post the listing on HAR.com for you, but they typically require a fee. On average the fee will be the same amount as the first month’s rent, but be sure to check with your local realtor or broker as each office operates differently.

Once you have a successful listing, consider your tenant screening process. We have a short and handy checklist here under our resources tab. Depending on what platforms you list on, you may be receiving calls and emails daily with potential residential tenants requesting showing or additional information and sending applications. A tip is to create a short and simple script that you can use over and over throughout the process, making it seamless each time you handle another call or email.

The screening process should include some form of credit check, background check, and identity confirmation through the application. A common application form is the Texas Realtors Residential Lease Application (TXR-2003). You should also set an income requirement (typically 3x the monthly rent) and verify the potential tenant’s ability to pay. Additionally, it is important to confirm the tenant is employed and received good referrals from previous landlords. Come up with an outline of requirements for the potential tenant to meet that ensures they have good credit history and are a responsible tenant. In the event you decline an application, you should inform the potential tenant in writing through an adverse action letter.

Once you have determined who your new tenant will be, send them a deposit to hold letter and welcome letter outlining their lease agreement start date, security deposit amount, first month’s rent and any other requirements before move in. To see a sample of a deposit to hold letter and welcome letter, subscribe to our mailing list.

Prepare the necessary documents to execute prior to the tenant moving in. These documents may include a lease, pet addendum, inspection report, community/house rules and disclosures. You may need additional documents or addendums depending on your situation.

Finally, once the documents are executed and the tenant receives the keys to the property, set up your management procedure. Consider how the tenant will pay monthly rent, such as through mailing certified funds, online payments or personal pickup/delivery of payments. Be sure to explain to your tenant how to submit a maintenance request or how to contact you in an emergency.

From there do your best to maintain a stable and productive relationship with the tenant. In the event of a lease violation or eviction, see our article on residential evictions for more information.

Landlording can be daunting for a new residential investor, so be sure to check out online resources and seek help from professionals or a mentor.

Our firm handles landlord/tenant issues for our investor clients regularly. We would be happy to help you. To speak to an attorney and learn more about our services, schedule a consultation here.

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