June 17, 2026
Most new real estate investors spend weeks, sometimes months, perfecting their underwriting. They run the numbers on cap rates, study comps, negotiate hard on price, and feel a real sense of accomplishment the day they close. Then the keys change hands, a tenant moves in, and suddenly the spreadsheet stops mattering as much as the phone call about a broken water heater at eleven at night.
Acquisition is the part everyone studies. Property management is the part that actually determines whether the investment performs the way the spreadsheet promised.
Tenant screening is where a lot of future headaches either get prevented or get created. The foundation of a good process is setting objective standards before you ever look at an application, things like minimum income thresholds, credit score requirements, and rental history expectations, and then applying those same standards consistently to every single applicant. Consistency is not just good practice, it is your best protection against discrimination claims down the line.
It is also worth knowing that the rules around screening have gotten more specific in recent years. In 2024, HUD's Office of Fair Housing and Equal Opportunity issued guidance clarifying how the Fair Housing Act applies to tenant screening, with particular caution around the overbroad use of credit history, eviction history, and criminal background checks.
The Fair Housing Act prohibits discrimination based on seven federally protected classes, and many states and cities, including New York, add their own protected categories on top of that, such as lawful source of income. The practical takeaway is simple: write down your screening criteria in advance, apply them the same way to everyone, and make sure those criteria are actually relevant to whether someone can reasonably be expected to pay rent and take care of the property.
A strong lease does a lot of quiet work for you. At minimum, it should clearly spell out rent terms, maintenance responsibilities for both you and the tenant, and any property-specific policies. Once you have selected a tenant, finalize the move-in with a security deposit, typically one to two months of rent, a signed lease, and a documented move-in checklist or condition report.
That checklist matters more than it seems. It is your best evidence if there is ever a dispute about the property's condition at move-out.
This is the number most new investors underestimate. There are a few common rules of thumb worth knowing. The 1 percent rule suggests budgeting roughly 1 percent of the property's value each year toward maintenance and repairs, while the 50 percent rule suggests reserving about half of your gross rental income for maintenance, taxes, and insurance combined. Other guides suggest a narrower band of 5 to 15 percent of gross rental income set aside specifically for maintenance, scaled up or down based on the age and condition of the property.
None of these rules are perfectly precise, and the right number for your property depends heavily on its age, systems, and overall condition. The point is not to pick the exact right percentage, it is to actually have a dedicated reserve at all, rather than treating every repair as a surprise that comes out of pocket. On the prevention side, building a simple maintenance calendar with semi-annual inspections of HVAC systems, plumbing, roofing, and safety equipment, and documenting each inspection, goes a long way toward catching small issues before they become expensive ones.
Every state has its own landlord-tenant framework, but if you are investing in New York, there is one concept you need to know cold: the warranty of habitability. Under New York Real Property Law Section 235-b, every residential lease automatically includes an implied promise that the unit is fit for human habitation, and this right cannot be waived, even if a tenant signs a lease that says otherwise, according to the NYC Bar Association.
Since 2019, this warranty has also explicitly included a duty to actually make repairs, not just a passive standard. It covers common areas of the building, not just individual units, and tenants who experience a breach can potentially seek a rent abatement through housing court.
New York also has specific heat and hot water requirements that catch new landlords off guard. Buildings must provide a minimum indoor temperature of 68 degrees during the day when it is below 55 degrees outside, 62 degrees overnight, and hot water at a minimum of 120 degrees year-round, according to a summary of New York habitability standards.
If you are buying a multifamily property in New York, building these obligations into your operating budget and maintenance plan from day one will save you from a much more expensive lesson later.
The deal you underwrite on a spreadsheet is only half the investment. The other half happens after closing, in how well the property is actually run day to day. New investors who build a property management plan with the same rigor they bring to acquisition, screening criteria, lease terms, maintenance reserves, and legal compliance, tend to be the ones whose actual returns look like the projections they started with. The investors who skip this step usually find out the hard way that a great purchase price does not protect you from a bad tenant, a deferred repair, or a fair housing complaint.
Disclaimer: This content is intended for informational and educational purposes only and is not intended to be construed as legal, tax, financial, or insurance advice. Every property and tax situation is unique. Please consult a licensed attorney, CPA, or tax professional regarding your specific circumstances before making any decisions related to property improvements, tax assessments, or real estate transactions. Mohammed M. Rahman is a licensed real estate broker in New York. Contact: Mo@ClosedByMo.com.
