How can I protect myself when renting a house to someone?

Great question. I manage several properties in Michigan; both residential and commercial. The 3 most important things about rental properties is, in this order; 1. screen the tenant 2. screen the tenant, 3. screen the tenant.
The only way you can predict future performance is to analyze past behavior. Remove emotion from the equation. Consult an attorney to draft your lease agreement. Invoke the services of a local real estate professional who has experience in this area. Like anything worth doing, there is risk, but these risks can be mitigated.

That’s a great and very real question, and one that every potential landlord should ask before jumping in. Owning a rental property can be a fantastic way to build long-term wealth, but it’s not “easy money.” Like any investment, success comes from preparation, protection, and having the right systems in place.

Here’s how to protect yourself and minimize risk when renting out a home:

1. Screen Tenants Thoroughly

The most important step in protecting yourself is selecting the right tenant.

Run credit, criminal, and eviction background checks.

Verify employment and income (aim for at least three times the rent).

Call previous landlords to confirm payment history and behavior.

Meet potential tenants in person when possible.
A good tenant is your best insurance policy.

2. Use a Strong Lease Agreement

Avoid generic forms online. Work with a real estate attorney or experienced property manager to draft a lease that’s clear and enforceable under Michigan law.

Include:

Rent due dates and late fees

Maintenance responsibilities

Pet and occupancy limits

Rules for property condition and inspections
A detailed lease can prevent 90 percent of disputes before they start.

3. Require a Solid Security Deposit

Michigan allows landlords to collect up to 1.5 months’ rent as a security deposit.
This protects you if a tenant leaves early, damages the property, or skips out on rent.
Keep the deposit in a separate account and follow Michigan’s specific rules for notices and returns — it keeps you compliant and professional.

4. Keep Documentation and Communication in Writing

Use text or email for rent reminders, maintenance updates, and agreements.
If you ever need to enforce the lease or go to court, clear records make all the difference.

5. Consider Landlord Insurance and an LLC

A standard homeowner’s policy usually doesn’t cover rental activity.
A landlord policy protects you from liability, loss of rent, and damage caused by tenants.
If you plan to own multiple rentals, putting each property in its own LLC can help shield your personal assets from legal or financial risk.

6. Plan for Vacancies and Unexpected Costs

Even with great tenants, you will face vacancy periods and repairs.
Set aside at least three to six months of mortgage payments as a reserve.
This gives you peace of mind if a tenant leaves suddenly or you need time to find the right replacement.

7. Hire a Professional Property Manager (If Needed)

If you don’t want the day-to-day stress of managing tenants, consider hiring a local property manager.

They handle marketing, screening, maintenance, rent collection, and evictions — for a percentage of monthly rent. It can be well worth it for peace of mind and protection.

The Bottom Line

Owning a rental can absolutely be beneficial, but only if it’s approached like a business, not a hobby. With the right tenant screening, lease structure, insurance, and financial buffer, you can protect yourself while building long-term equity and steady income.

Not everyone is cut out to be a landlord. Protect yourself and vet the potential tenant. Get a good attorney for legal advice. Good tenants are hard to come by and in NY have more rights than landlords.