rental property

What Can Owners Do to Protect Their Rental Property Investment?

Owning and managing rental property is a superior real estate investment opportunity because of the passive income you stand to earn.

But no investment is without risks, and the rental property business certainly has its fair share of potential liabilities.

In this article, we outline six helpful strategies property owners can use to protect their rental property investment.


Carry out Careful Tenant Screening

Tenants are the primary residents of a rental property. So unless you live on the premises as well, your tenants hold your investment in their hands. They are the ones continuously in contact with it. Thus, it makes sense that when sorting through tenant applications, you take your time to screen potential residents carefully. Run background checks, ask for references, and create air-tight leases. Ensure you leave your investment in charge of responsible adults.

You should also check the conditions of your units through regular inspections and between tenants. Collect and keep time-stamped pictures and videos when possible. No matter how trustworthy and sincere your tenants may seem, it’s better to rely on hard evidence rather than testimony in the event of a dispute.

Study Landlord-Tenant Laws Carefully

The best way to avoid legal minefields is to be familiar with both local and national landlord-tenant laws. It’s essential to adhere to these rules strictly. Doing so will help you avoid a lawsuit that could land you with a heavy fine or threaten your investment in other ways.

You should also familiarize yourself with fair housing laws. Treat all your tenants equally, as discrimination suits can quickly get messy. The best way to avoid such civil claims is to have a written tenant selection policy that justifies your reasons for accepting or rejecting tenant applications.

Prioritize Home Security Measures to Protect Your Rental Property

Smart real estate investors take home security seriously. Many external and internal elements may pose a threat to your rental property. It falls on you to avert these mishaps.

Luckily, you can take full advantage of the fact that we live in a digital age to adopt smart home technologies. Surveillance cameras and security lights can dissuade burglars and trespassers. Smart alarms, thermostats, and other home systems can improve rental maintenance by alerting you to pending problems. Property owners have several options for tools that can help protect the safety of their tenants’ lives and properties.

Get Insurance on Your Rental Property

Image by mohamed Hassan from Pixabay 

Owning rental property includes many risks. You’re liable for damages from the roof of the building to its foundation. Moreover, when accidents happen, they can be costly to repair. Property owners with homeowners’ insurance have extra safety because they don’t have to pay out of pocket for such mishaps. The insurance company takes care of the bill. However, it’s crucial to note that the packages vary. So make it a point to study the various coverages and choose the one that suits your needs and budget.

Set up a Limited Liability Company

You can take it an extra step from insurance and form a limited liability company (LLC). This process separates your personal assets from your business assets. By legitimizing your rental business as an LLC or other corporate entity, you curb the risk of losing everything in the event of a lawsuit. After setting up your LLC, you can transfer the deed of your rental property to the company. If a tenant should decide to sue you, you don’t need to worry about your home, car, or other assets being used for remuneration.


Vet Employees and Contractors Who Work on Your Rental Property

Managing a rental property is a lot of work and doing it yourself can be tedious. So it’s not unusual for property owners to employ workers to lighten the load. These could include regular staff like a property manager, a janitor, a gardener, or on-demand contractors like an electrician or a plumber. Although these employees are meant to reduce the workload, you could still encounter the rare difficult ones. Take the time to read their reviews and conduct in-depth interviews before hiring.

If you plan to file their work in your tax deductions, ensure you classify your employees appropriately to avoid getting into a hassle with the IRS. It’s also a good idea to keep a copy of your contracts and agreements.


You can’t be a property owner without taking on some risks, but it can be rewarding if you know how to mitigate those risks and protect yourself and your rental property.

Still, it’s helpful to have the best players on your team. Hire a professional who understands the business. They can help you develop clear strategies to minimize your liabilities and maximize your profits.