If you are going to do your own management, buy Leigh Robinson’s book, titled Landlording. And read your local landlord-tenant laws.
The most important thing is to properly screen tenants.
First you have to find potential tenants. You can advertise for tenants in Craigslist, other local tenant listing sites, or in alternative newspapers (not the main newspaper). Alternative or entertainment newspapers tend to be geared towards a younger demographic, people who are more likely to rent. Usually Craigslist is sufficient. You may need to delete and relist your ad every so often so it stays closer to the top (this may require changing the text each time to avoid getting banned). Include plenty of pictures.
You should have an application form ready. There may be commercial screening services that have an application form available for you to use. Do not accept anyone who needs to move in right now. Some bad tenants prey on small landlords and hope that they do not do proper screening. Beware that there may be landlord-tenant laws governing the screening process.
You should have rental criteria ready. This way, if you decline one tenant but accept another, it makes it harder for the declined tenant to win a discrimination suit.
One of the main things to look for is credit score. Someone who has good credit keeps their promises. Someone who has bad credit does not. There may be extenuating circumstances, though, like unexpected medical bills, a divorce, or a student who has not yet developed credit.
Also, it is important to contact the second to last landlord when checking references. The current landlord may give a good reference just to get rid of the tenant.
Your criteria may include items such as credit score over ___, whatever amount you decide, and specify which type of score (Transunion, etc.), no evictions in the last x years, rent paid in full every month, no unpaid utilities or damages in the last x years, no complaints, no bounces or NSF checks, verifiable income over the last y months, employed a certain minimum amount of time, no bankruptcies, no felony convictions, no sex offense, drug, or domestic abuse convictions in the last x years. Be sure that your landlord tenant laws allow you to screen for these criteria. You would think that you should be able to screen out felons but some landlord tenant laws forbid such blanket prohibitions.
There are tenant screening services that will check criminal history for you or it may be possible to check public records.
You can also perform a Google search and look up the potential tenant’s name, to see where it appears. There may be publicly available information in social networking sites, for example.
For self employed, you can use tax returns for proof of income. For students without a credit score, you should require a co-signer.
You can look at the potential renters car for an example of their level of cleanliness.
Some say that you should give your potential renters a copy of your criteria so they can decide whether it is worth paying the application fee. You may screen out some undesirables just by having an application form and rental criteria.
Be aware that there may be people going around looking for potential discrimination suits.