diff --git a/README.md b/README.md
index e8acfba..5314851 100644
--- a/README.md
+++ b/README.md
@@ -1,3 +1,116 @@
-# FastAPI Application
+# Rental Services API
 
-This is a FastAPI application bootstrapped by BackendIM, the AI-powered backend generation platform.
+This is a FastAPI application for managing rental services. It provides endpoints for managing rental items, categories, customers, and rental records.
+
+## Features
+
+- Rental items management (with categories)
+- Customer management
+- Rental records tracking
+- SQLite database with SQLAlchemy ORM
+- Alembic for database migrations
+- OpenAPI documentation
+
+## API Endpoints
+
+### Health Check
+- GET `/health` - Check API health
+
+### Categories
+- GET `/api/v1/rentals/categories/` - List all categories
+- GET `/api/v1/rentals/categories/{category_id}` - Get category by ID
+
+### Rental Items
+- GET `/api/v1/rentals/items/` - List all rental items
+  - Query params: 
+    - `category_id` - Filter by category
+    - `available_only` - Filter by availability
+- GET `/api/v1/rentals/items/{item_id}` - Get rental item by ID
+
+### Customers
+- GET `/api/v1/rentals/customers/` - List all customers
+- GET `/api/v1/rentals/customers/{customer_id}` - Get customer by ID
+- GET `/api/v1/rentals/customers/email/{email}` - Get customer by email
+
+### Rental Records
+- GET `/api/v1/rentals/records/` - List all rental records
+  - Query params:
+    - `customer_id` - Filter by customer
+    - `item_id` - Filter by rental item
+    - `active_only` - Filter active rentals only
+- GET `/api/v1/rentals/records/{record_id}` - Get rental record by ID
+
+## Project Structure
+
+```
+├── app/
+│   ├── api/
+│   │   └── v1/
+│   │       ├── endpoints/
+│   │       │   └── rentals.py      # API endpoints
+│   │       └── api.py              # API router
+│   ├── core/
+│   │   └── config.py               # Application configuration
+│   ├── crud/
+│   │   ├── base.py                 # Base CRUD operations
+│   │   ├── crud_category.py        # Category CRUD operations
+│   │   ├── crud_customer.py        # Customer CRUD operations
+│   │   ├── crud_rental_item.py     # Rental item CRUD operations
+│   │   └── crud_rental_record.py   # Rental record CRUD operations
+│   ├── db/
+│   │   └── session.py              # Database session
+│   ├── models/
+│   │   ├── base.py                 # Base model
+│   │   └── rental.py               # Database models
+│   └── schemas/
+│       ├── category.py             # Category schemas
+│       ├── customer.py             # Customer schemas
+│       ├── rental_item.py          # Rental item schemas
+│       └── rental_record.py        # Rental record schemas
+├── migrations/                     # Alembic migrations
+│   ├── versions/
+│   │   └── 001_initial_schema.py   # Initial database schema
+│   ├── env.py                      # Migration environment
+│   └── script.py.mako              # Migration script template
+├── alembic.ini                     # Alembic configuration
+├── main.py                         # Application entry point
+└── requirements.txt                # Python dependencies
+```
+
+## Setup and Running
+
+1. Install dependencies:
+   ```
+   pip install -r requirements.txt
+   ```
+
+2. Run database migrations:
+   ```
+   alembic upgrade head
+   ```
+
+3. Start the API server:
+   ```
+   uvicorn main:app --reload
+   ```
+
+4. Access the API documentation:
+   - Swagger UI: http://localhost:8000/docs
+   - ReDoc: http://localhost:8000/redoc
+
+## Environment Variables
+
+The application uses environment variables for configuration. Create a `.env` file in the root directory with the following variables:
+
+```
+PROJECT_NAME=Rental Services API
+API_V1_STR=/api/v1
+```
+
+## Database
+
+The application uses SQLite as the database. The database file is stored at `/app/storage/db/db.sqlite`. Make sure the directory exists or is created at runtime.
+
+## License
+
+This project is licensed under the MIT License.
\ No newline at end of file
diff --git a/alembic.ini b/alembic.ini
new file mode 100644
index 0000000..35b9750
--- /dev/null
+++ b/alembic.ini
@@ -0,0 +1,97 @@
+# A generic, single database configuration.
+
+[alembic]
+# path to migration scripts
+script_location = migrations
+
+# template used to generate migration files
+# file_template = %%(rev)s_%%(slug)s
+
+# sys.path path, will be prepended to sys.path if present.
+# defaults to the current working directory.
+prepend_sys_path = .
+
+# timezone to use when rendering the date within the migration file
+# as well as the filename.
+# If specified, requires the python-dateutil library that can be
+# installed by adding `alembic[tz]` to the pip requirements
+# string value is passed to dateutil.tz.gettz()
+# leave blank for localtime
+# timezone =
+
+# max length of characters to apply to the
+# "slug" field
+# truncate_slug_length = 40
+
+# set to 'true' to run the environment during
+# the 'revision' command, regardless of autogenerate
+# revision_environment = false
+
+# set to 'true' to allow .pyc and .pyo files without
+# a source .py file to be detected as revisions in the
+# versions/ directory
+# sourceless = false
+
+# version location specification; This defaults
+# to migrations/versions.  When using multiple version
+# directories, initial revisions must be specified with --version-path.
+# The path separator used here should be the separator specified by "version_path_separator" below.
+# version_locations = %(here)s/bar:%(here)s/bat:migrations/versions
+
+# version path separator; As mentioned above, this is the character used to split
+# version_locations. The default within new alembic.ini files is "os", which uses os.pathsep.
+# If this key is omitted entirely, it falls back to the legacy behavior of splitting on spaces and/or commas.
+# Valid values for version_path_separator are:
+#
+# version_path_separator = :
+# version_path_separator = ;
+# version_path_separator = space
+version_path_separator = os  # Use os.pathsep. Default configuration used for new projects.
+
+# the output encoding used when revision files
+# are written from script.py.mako
+# output_encoding = utf-8
+
+# SQLite URL example
+sqlalchemy.url = sqlite:////app/storage/db/db.sqlite
+
+# [post_write_hooks]
+# hooks = black, blacken_docs
+# black.type = console_scripts
+# black.entrypoint = black
+# blacken_docs.type = console_scripts
+# blacken_docs.entrypoint = blacken_docs
+
+[loggers]
+keys = root,sqlalchemy,alembic
+
+[handlers]
+keys = console
+
+[formatters]
+keys = generic
+
+[logger_root]
+level = WARN
+handlers = console
+qualname =
+
+[logger_sqlalchemy]
+level = WARN
+handlers =
+qualname = sqlalchemy.engine
+
+[logger_alembic]
+level = INFO
+handlers =
+qualname = alembic
+
+[handler_console]
+class = StreamHandler
+args = (sys.stderr,)
+level = NOTSET
+formatter = generic
+
+[formatter_generic]
+format = %(levelname)-5.5s [%(name)s] %(message)s
+datefmt = %H:%M:%S
\ No newline at end of file
diff --git a/app/__init__.py b/app/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/app/api/__init__.py b/app/api/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/app/api/v1/__init__.py b/app/api/v1/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/app/api/v1/api.py b/app/api/v1/api.py
new file mode 100644
index 0000000..4aaabea
--- /dev/null
+++ b/app/api/v1/api.py
@@ -0,0 +1,6 @@
+from fastapi import APIRouter
+
+from app.api.v1.endpoints import rentals
+
+api_router = APIRouter(prefix="/api/v1")
+api_router.include_router(rentals.router, prefix="/rentals", tags=["rentals"])
\ No newline at end of file
diff --git a/app/api/v1/endpoints/__init__.py b/app/api/v1/endpoints/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/app/api/v1/endpoints/rentals.py b/app/api/v1/endpoints/rentals.py
new file mode 100644
index 0000000..afdc4fe
--- /dev/null
+++ b/app/api/v1/endpoints/rentals.py
@@ -0,0 +1,159 @@
+from typing import Any, List
+
+from fastapi import APIRouter, Depends, HTTPException
+from sqlalchemy.orm import Session
+
+from app import crud, schemas
+from app.db.session import get_db
+
+router = APIRouter()
+
+
+@router.get("/categories/", response_model=List[schemas.Category])
+def read_categories(
+    db: Session = Depends(get_db),
+    skip: int = 0,
+    limit: int = 100,
+) -> Any:
+    """
+    Retrieve all categories.
+    """
+    categories = crud.category.get_multi(db, skip=skip, limit=limit)
+    return categories
+
+
+@router.get("/categories/{category_id}", response_model=schemas.Category)
+def read_category(
+    *,
+    db: Session = Depends(get_db),
+    category_id: int,
+) -> Any:
+    """
+    Get category by ID.
+    """
+    category = crud.category.get(db, id=category_id)
+    if not category:
+        raise HTTPException(status_code=404, detail="Category not found")
+    return category
+
+
+@router.get("/items/", response_model=List[schemas.RentalItem])
+def read_rental_items(
+    db: Session = Depends(get_db),
+    skip: int = 0,
+    limit: int = 100,
+    category_id: int = None,
+    available_only: bool = False,
+) -> Any:
+    """
+    Retrieve rental items with optional filtering.
+    """
+    if category_id:
+        items = crud.rental_item.get_by_category(
+            db, category_id=category_id, skip=skip, limit=limit
+        )
+    elif available_only:
+        items = crud.rental_item.get_available(db, skip=skip, limit=limit)
+    else:
+        items = crud.rental_item.get_multi(db, skip=skip, limit=limit)
+    return items
+
+
+@router.get("/items/{item_id}", response_model=schemas.RentalItem)
+def read_rental_item(
+    *,
+    db: Session = Depends(get_db),
+    item_id: int,
+) -> Any:
+    """
+    Get rental item by ID.
+    """
+    item = crud.rental_item.get(db, id=item_id)
+    if not item:
+        raise HTTPException(status_code=404, detail="Rental item not found")
+    return item
+
+
+@router.get("/customers/", response_model=List[schemas.Customer])
+def read_customers(
+    db: Session = Depends(get_db),
+    skip: int = 0,
+    limit: int = 100,
+) -> Any:
+    """
+    Retrieve all customers.
+    """
+    customers = crud.customer.get_multi(db, skip=skip, limit=limit)
+    return customers
+
+
+@router.get("/customers/{customer_id}", response_model=schemas.Customer)
+def read_customer(
+    *,
+    db: Session = Depends(get_db),
+    customer_id: int,
+) -> Any:
+    """
+    Get customer by ID.
+    """
+    customer = crud.customer.get(db, id=customer_id)
+    if not customer:
+        raise HTTPException(status_code=404, detail="Customer not found")
+    return customer
+
+
+@router.get("/customers/email/{email}", response_model=schemas.Customer)
+def read_customer_by_email(
+    *,
+    db: Session = Depends(get_db),
+    email: str,
+) -> Any:
+    """
+    Get customer by email.
+    """
+    customer = crud.customer.get_by_email(db, email=email)
+    if not customer:
+        raise HTTPException(status_code=404, detail="Customer not found")
+    return customer
+
+
+@router.get("/records/", response_model=List[schemas.RentalRecord])
+def read_rental_records(
+    db: Session = Depends(get_db),
+    skip: int = 0,
+    limit: int = 100,
+    customer_id: int = None,
+    item_id: int = None,
+    active_only: bool = False,
+) -> Any:
+    """
+    Retrieve rental records with optional filtering.
+    """
+    if customer_id:
+        records = crud.rental_record.get_by_customer(
+            db, customer_id=customer_id, skip=skip, limit=limit
+        )
+    elif item_id:
+        records = crud.rental_record.get_by_item(
+            db, item_id=item_id, skip=skip, limit=limit
+        )
+    elif active_only:
+        records = crud.rental_record.get_active(db, skip=skip, limit=limit)
+    else:
+        records = crud.rental_record.get_multi(db, skip=skip, limit=limit)
+    return records
+
+
+@router.get("/records/{record_id}", response_model=schemas.RentalRecord)
+def read_rental_record(
+    *,
+    db: Session = Depends(get_db),
+    record_id: int,
+) -> Any:
+    """
+    Get rental record by ID.
+    """
+    record = crud.rental_record.get(db, id=record_id)
+    if not record:
+        raise HTTPException(status_code=404, detail="Rental record not found")
+    return record
\ No newline at end of file
diff --git a/app/core/__init__.py b/app/core/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/app/core/config.py b/app/core/config.py
new file mode 100644
index 0000000..6c2bd2d
--- /dev/null
+++ b/app/core/config.py
@@ -0,0 +1,34 @@
+from pathlib import Path
+from typing import List
+
+from pydantic import AnyHttpUrl, field_validator
+from pydantic_settings import BaseSettings
+
+
+class Settings(BaseSettings):
+    """Application settings."""
+    PROJECT_NAME: str = "Rental Services API"
+    API_V1_STR: str = "/api/v1"
+    
+    # Database
+    DB_DIR: Path = Path("/app") / "storage" / "db"
+    
+    # CORS
+    BACKEND_CORS_ORIGINS: List[AnyHttpUrl] = []
+
+    @field_validator("BACKEND_CORS_ORIGINS", mode="before")
+    @classmethod
+    def assemble_cors_origins(cls, v) -> List[str]:
+        """Parse CORS origins from env variables."""
+        if isinstance(v, str) and not v.startswith("["):
+            return [i.strip() for i in v.split(",")]
+        elif isinstance(v, (list, str)):
+            return v
+        raise ValueError(v)
+
+    class Config:
+        case_sensitive = True
+        env_file = ".env"
+
+
+settings = Settings()
\ No newline at end of file
diff --git a/app/crud/__init__.py b/app/crud/__init__.py
new file mode 100644
index 0000000..c29ee6a
--- /dev/null
+++ b/app/crud/__init__.py
@@ -0,0 +1,4 @@
+from app.crud.crud_category import category
+from app.crud.crud_customer import customer
+from app.crud.crud_rental_item import rental_item
+from app.crud.crud_rental_record import rental_record
diff --git a/app/crud/base.py b/app/crud/base.py
new file mode 100644
index 0000000..56d61ae
--- /dev/null
+++ b/app/crud/base.py
@@ -0,0 +1,80 @@
+from typing import Any, Dict, Generic, List, Optional, Type, TypeVar, Union
+
+from fastapi.encoders import jsonable_encoder
+from pydantic import BaseModel
+from sqlalchemy.orm import Session
+
+from app.models.base import Base
+
+ModelType = TypeVar("ModelType", bound=Base)
+CreateSchemaType = TypeVar("CreateSchemaType", bound=BaseModel)
+UpdateSchemaType = TypeVar("UpdateSchemaType", bound=BaseModel)
+
+
+class CRUDBase(Generic[ModelType, CreateSchemaType, UpdateSchemaType]):
+    """
+    CRUD base class with default methods to Create, Read, Update, Delete (CRUD).
+    """
+
+    def __init__(self, model: Type[ModelType]):
+        """
+        Initialize CRUD instance with the specified SQLAlchemy model.
+        """
+        self.model = model
+
+    def get(self, db: Session, id: Any) -> Optional[ModelType]:
+        """
+        Get a model instance by id.
+        """
+        return db.query(self.model).filter(self.model.id == id).first()
+
+    def get_multi(
+        self, db: Session, *, skip: int = 0, limit: int = 100
+    ) -> List[ModelType]:
+        """
+        Get multiple model instances.
+        """
+        return db.query(self.model).offset(skip).limit(limit).all()
+
+    def create(self, db: Session, *, obj_in: CreateSchemaType) -> ModelType:
+        """
+        Create a new model instance.
+        """
+        obj_in_data = jsonable_encoder(obj_in)
+        db_obj = self.model(**obj_in_data)
+        db.add(db_obj)
+        db.commit()
+        db.refresh(db_obj)
+        return db_obj
+
+    def update(
+        self,
+        db: Session,
+        *,
+        db_obj: ModelType,
+        obj_in: Union[UpdateSchemaType, Dict[str, Any]]
+    ) -> ModelType:
+        """
+        Update a model instance.
+        """
+        obj_data = jsonable_encoder(db_obj)
+        if isinstance(obj_in, dict):
+            update_data = obj_in
+        else:
+            update_data = obj_in.dict(exclude_unset=True)
+        for field in obj_data:
+            if field in update_data:
+                setattr(db_obj, field, update_data[field])
+        db.add(db_obj)
+        db.commit()
+        db.refresh(db_obj)
+        return db_obj
+
+    def remove(self, db: Session, *, id: int) -> ModelType:
+        """
+        Delete a model instance.
+        """
+        obj = db.query(self.model).get(id)
+        db.delete(obj)
+        db.commit()
+        return obj
\ No newline at end of file
diff --git a/app/crud/crud_category.py b/app/crud/crud_category.py
new file mode 100644
index 0000000..377e7e4
--- /dev/null
+++ b/app/crud/crud_category.py
@@ -0,0 +1,22 @@
+from typing import Optional
+
+from sqlalchemy.orm import Session
+
+from app.crud.base import CRUDBase
+from app.models.rental import Category
+from app.schemas.category import CategoryCreate, CategoryUpdate
+
+
+class CRUDCategory(CRUDBase[Category, CategoryCreate, CategoryUpdate]):
+    """
+    CRUD operations for Category model.
+    """
+    
+    def get_by_name(self, db: Session, *, name: str) -> Optional[Category]:
+        """
+        Get a category by name.
+        """
+        return db.query(Category).filter(Category.name == name).first()
+
+
+category = CRUDCategory(Category)
\ No newline at end of file
diff --git a/app/crud/crud_customer.py b/app/crud/crud_customer.py
new file mode 100644
index 0000000..cfae0eb
--- /dev/null
+++ b/app/crud/crud_customer.py
@@ -0,0 +1,35 @@
+from typing import List, Optional
+
+from sqlalchemy.orm import Session
+
+from app.crud.base import CRUDBase
+from app.models.rental import Customer
+from app.schemas.customer import CustomerCreate, CustomerUpdate
+
+
+class CRUDCustomer(CRUDBase[Customer, CustomerCreate, CustomerUpdate]):
+    """
+    CRUD operations for Customer model.
+    """
+    
+    def get_by_email(self, db: Session, *, email: str) -> Optional[Customer]:
+        """
+        Get a customer by email.
+        """
+        return db.query(Customer).filter(Customer.email == email).first()
+    
+    def get_by_name(
+        self, db: Session, *, first_name: str, last_name: str, 
+        skip: int = 0, limit: int = 100
+    ) -> List[Customer]:
+        """
+        Get customers by first and last name.
+        """
+        return db.query(Customer)\
+            .filter(Customer.first_name == first_name, Customer.last_name == last_name)\
+            .offset(skip)\
+            .limit(limit)\
+            .all()
+
+
+customer = CRUDCustomer(Customer)
\ No newline at end of file
diff --git a/app/crud/crud_rental_item.py b/app/crud/crud_rental_item.py
new file mode 100644
index 0000000..34940de
--- /dev/null
+++ b/app/crud/crud_rental_item.py
@@ -0,0 +1,46 @@
+from typing import List, Optional
+
+from sqlalchemy.orm import Session
+
+from app.crud.base import CRUDBase
+from app.models.rental import RentalItem
+from app.schemas.rental_item import RentalItemCreate, RentalItemUpdate
+
+
+class CRUDRentalItem(CRUDBase[RentalItem, RentalItemCreate, RentalItemUpdate]):
+    """
+    CRUD operations for RentalItem model.
+    """
+    
+    def get_by_name(self, db: Session, *, name: str) -> Optional[RentalItem]:
+        """
+        Get a rental item by name.
+        """
+        return db.query(RentalItem).filter(RentalItem.name == name).first()
+    
+    def get_by_category(
+        self, db: Session, *, category_id: int, skip: int = 0, limit: int = 100
+    ) -> List[RentalItem]:
+        """
+        Get all rental items by category_id.
+        """
+        return db.query(RentalItem)\
+            .filter(RentalItem.category_id == category_id)\
+            .offset(skip)\
+            .limit(limit)\
+            .all()
+    
+    def get_available(
+        self, db: Session, *, skip: int = 0, limit: int = 100
+    ) -> List[RentalItem]:
+        """
+        Get all available rental items.
+        """
+        return db.query(RentalItem)\
+            .filter(RentalItem.is_available)\
+            .offset(skip)\
+            .limit(limit)\
+            .all()
+
+
+rental_item = CRUDRentalItem(RentalItem)
\ No newline at end of file
diff --git a/app/crud/crud_rental_record.py b/app/crud/crud_rental_record.py
new file mode 100644
index 0000000..00b55b5
--- /dev/null
+++ b/app/crud/crud_rental_record.py
@@ -0,0 +1,69 @@
+from datetime import date
+from typing import List
+
+from sqlalchemy.orm import Session
+
+from app.crud.base import CRUDBase
+from app.models.rental import RentalRecord
+from app.schemas.rental_record import RentalRecordCreate, RentalRecordUpdate
+
+
+class CRUDRentalRecord(CRUDBase[RentalRecord, RentalRecordCreate, RentalRecordUpdate]):
+    """
+    CRUD operations for RentalRecord model.
+    """
+    
+    def get_by_customer(
+        self, db: Session, *, customer_id: int, skip: int = 0, limit: int = 100
+    ) -> List[RentalRecord]:
+        """
+        Get all rental records for a customer.
+        """
+        return db.query(RentalRecord)\
+            .filter(RentalRecord.customer_id == customer_id)\
+            .offset(skip)\
+            .limit(limit)\
+            .all()
+    
+    def get_by_item(
+        self, db: Session, *, item_id: int, skip: int = 0, limit: int = 100
+    ) -> List[RentalRecord]:
+        """
+        Get all rental records for an item.
+        """
+        return db.query(RentalRecord)\
+            .filter(RentalRecord.item_id == item_id)\
+            .offset(skip)\
+            .limit(limit)\
+            .all()
+    
+    def get_active(
+        self, db: Session, *, skip: int = 0, limit: int = 100
+    ) -> List[RentalRecord]:
+        """
+        Get all active rental records (not yet returned).
+        """
+        return db.query(RentalRecord)\
+            .filter(RentalRecord.actual_return_date is None)\
+            .offset(skip)\
+            .limit(limit)\
+            .all()
+    
+    def get_by_date_range(
+        self, db: Session, *, start_date: date, end_date: date, 
+        skip: int = 0, limit: int = 100
+    ) -> List[RentalRecord]:
+        """
+        Get all rental records within a date range.
+        """
+        return db.query(RentalRecord)\
+            .filter(
+                RentalRecord.rental_date >= start_date, 
+                RentalRecord.return_date <= end_date
+            )\
+            .offset(skip)\
+            .limit(limit)\
+            .all()
+
+
+rental_record = CRUDRentalRecord(RentalRecord)
\ No newline at end of file
diff --git a/app/db/__init__.py b/app/db/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/app/db/session.py b/app/db/session.py
new file mode 100644
index 0000000..b1336af
--- /dev/null
+++ b/app/db/session.py
@@ -0,0 +1,27 @@
+from sqlalchemy import create_engine
+from sqlalchemy.ext.declarative import declarative_base
+from sqlalchemy.orm import sessionmaker
+
+from app.core.config import settings
+
+# Create the database directory if it doesn't exist
+settings.DB_DIR.mkdir(parents=True, exist_ok=True)
+
+SQLALCHEMY_DATABASE_URL = f"sqlite:///{settings.DB_DIR}/db.sqlite"
+
+engine = create_engine(
+    SQLALCHEMY_DATABASE_URL,
+    connect_args={"check_same_thread": False}
+)
+SessionLocal = sessionmaker(autocommit=False, autoflush=False, bind=engine)
+
+Base = declarative_base()
+
+
+# Dependency
+def get_db():
+    db = SessionLocal()
+    try:
+        yield db
+    finally:
+        db.close()
\ No newline at end of file
diff --git a/app/models/__init__.py b/app/models/__init__.py
new file mode 100644
index 0000000..5f8add6
--- /dev/null
+++ b/app/models/__init__.py
@@ -0,0 +1,2 @@
+from app.models.base import Base
+from app.models.rental import Category, Customer, RentalItem, RentalRecord
diff --git a/app/models/base.py b/app/models/base.py
new file mode 100644
index 0000000..ab5e01e
--- /dev/null
+++ b/app/models/base.py
@@ -0,0 +1,24 @@
+import datetime
+from typing import Any
+
+from sqlalchemy import Column, DateTime
+from sqlalchemy.ext.declarative import as_declarative, declared_attr
+
+
+@as_declarative()
+class Base:
+    """Base class for all models."""
+    id: Any
+    __name__: str
+    
+    # Generate __tablename__ automatically based on class name
+    @declared_attr
+    def __tablename__(cls) -> str:
+        return cls.__name__.lower()
+    
+    created_at = Column(DateTime, default=datetime.datetime.utcnow)
+    updated_at = Column(
+        DateTime, 
+        default=datetime.datetime.utcnow,
+        onupdate=datetime.datetime.utcnow
+    )
\ No newline at end of file
diff --git a/app/models/rental.py b/app/models/rental.py
new file mode 100644
index 0000000..cfb1241
--- /dev/null
+++ b/app/models/rental.py
@@ -0,0 +1,69 @@
+from sqlalchemy import Boolean, Column, Date, Float, ForeignKey, Integer, String, Text
+from sqlalchemy.orm import relationship
+
+from app.models.base import Base
+
+
+class Category(Base):
+    """Rental item categories."""
+    id = Column(Integer, primary_key=True, index=True)
+    name = Column(String, index=True, nullable=False)
+    description = Column(Text, nullable=True)
+    
+    # Relationship
+    items = relationship("RentalItem", back_populates="category")
+    
+    def __repr__(self):
+        return f"<Category {self.name}>"
+
+
+class RentalItem(Base):
+    """Rental items available for rent."""
+    id = Column(Integer, primary_key=True, index=True)
+    name = Column(String, index=True, nullable=False)
+    description = Column(Text, nullable=True)
+    daily_rate = Column(Float, nullable=False)
+    is_available = Column(Boolean, default=True, nullable=False)
+    category_id = Column(Integer, ForeignKey("category.id"), nullable=False)
+    
+    # Relationships
+    category = relationship("Category", back_populates="items")
+    rental_records = relationship("RentalRecord", back_populates="item")
+    
+    def __repr__(self):
+        return f"<RentalItem {self.name}>"
+
+
+class Customer(Base):
+    """Customer information."""
+    id = Column(Integer, primary_key=True, index=True)
+    first_name = Column(String, nullable=False)
+    last_name = Column(String, nullable=False)
+    email = Column(String, unique=True, index=True, nullable=False)
+    phone = Column(String, nullable=True)
+    address = Column(Text, nullable=True)
+    
+    # Relationship
+    rental_records = relationship("RentalRecord", back_populates="customer")
+    
+    def __repr__(self):
+        return f"<Customer {self.first_name} {self.last_name}>"
+
+
+class RentalRecord(Base):
+    """Records of rental transactions."""
+    id = Column(Integer, primary_key=True, index=True)
+    item_id = Column(Integer, ForeignKey("rentalitem.id"), nullable=False)
+    customer_id = Column(Integer, ForeignKey("customer.id"), nullable=False)
+    rental_date = Column(Date, nullable=False)
+    return_date = Column(Date, nullable=False)
+    actual_return_date = Column(Date, nullable=True)
+    total_cost = Column(Float, nullable=False)
+    notes = Column(Text, nullable=True)
+    
+    # Relationships
+    item = relationship("RentalItem", back_populates="rental_records")
+    customer = relationship("Customer", back_populates="rental_records")
+    
+    def __repr__(self):
+        return f"<RentalRecord {self.id}>"
\ No newline at end of file
diff --git a/app/schemas/__init__.py b/app/schemas/__init__.py
new file mode 100644
index 0000000..c2517c3
--- /dev/null
+++ b/app/schemas/__init__.py
@@ -0,0 +1,8 @@
+from app.schemas.category import Category, CategoryCreate, CategoryUpdate
+from app.schemas.customer import Customer, CustomerCreate, CustomerUpdate
+from app.schemas.rental_item import RentalItem, RentalItemCreate, RentalItemUpdate
+from app.schemas.rental_record import (
+    RentalRecord,
+    RentalRecordCreate,
+    RentalRecordUpdate,
+)
diff --git a/app/schemas/category.py b/app/schemas/category.py
new file mode 100644
index 0000000..56e0332
--- /dev/null
+++ b/app/schemas/category.py
@@ -0,0 +1,35 @@
+from datetime import datetime
+from typing import Optional
+
+from pydantic import BaseModel
+
+
+# Shared properties
+class CategoryBase(BaseModel):
+    name: str
+    description: Optional[str] = None
+
+
+# Properties to receive on category creation
+class CategoryCreate(CategoryBase):
+    pass
+
+
+# Properties to receive on category update
+class CategoryUpdate(CategoryBase):
+    name: Optional[str] = None
+
+
+# Properties shared by models stored in DB
+class CategoryInDBBase(CategoryBase):
+    id: int
+    created_at: datetime
+    updated_at: datetime
+
+    class Config:
+        from_attributes = True
+
+
+# Properties to return to client
+class Category(CategoryInDBBase):
+    pass
\ No newline at end of file
diff --git a/app/schemas/customer.py b/app/schemas/customer.py
new file mode 100644
index 0000000..7dab997
--- /dev/null
+++ b/app/schemas/customer.py
@@ -0,0 +1,42 @@
+from datetime import datetime
+from typing import Optional
+
+from pydantic import BaseModel
+
+
+# Shared properties
+class CustomerBase(BaseModel):
+    first_name: str
+    last_name: str
+    email: str  # Using str instead of EmailStr to avoid additional dependency
+    phone: Optional[str] = None
+    address: Optional[str] = None
+
+
+# Properties to receive on customer creation
+class CustomerCreate(CustomerBase):
+    pass
+
+
+# Properties to receive on customer update
+class CustomerUpdate(CustomerBase):
+    first_name: Optional[str] = None
+    last_name: Optional[str] = None
+    email: Optional[str] = None
+    phone: Optional[str] = None
+    address: Optional[str] = None
+
+
+# Properties shared by models stored in DB
+class CustomerInDBBase(CustomerBase):
+    id: int
+    created_at: datetime
+    updated_at: datetime
+
+    class Config:
+        from_attributes = True
+
+
+# Properties to return to client
+class Customer(CustomerInDBBase):
+    pass
\ No newline at end of file
diff --git a/app/schemas/rental_item.py b/app/schemas/rental_item.py
new file mode 100644
index 0000000..b8ddaa5
--- /dev/null
+++ b/app/schemas/rental_item.py
@@ -0,0 +1,42 @@
+from datetime import datetime
+from typing import Optional
+
+from pydantic import BaseModel
+
+
+# Shared properties
+class RentalItemBase(BaseModel):
+    name: str
+    description: Optional[str] = None
+    daily_rate: float
+    is_available: bool = True
+    category_id: int
+
+
+# Properties to receive on rental item creation
+class RentalItemCreate(RentalItemBase):
+    pass
+
+
+# Properties to receive on rental item update
+class RentalItemUpdate(RentalItemBase):
+    name: Optional[str] = None
+    description: Optional[str] = None
+    daily_rate: Optional[float] = None
+    is_available: Optional[bool] = None
+    category_id: Optional[int] = None
+
+
+# Properties shared by models stored in DB
+class RentalItemInDBBase(RentalItemBase):
+    id: int
+    created_at: datetime
+    updated_at: datetime
+
+    class Config:
+        from_attributes = True
+
+
+# Properties to return to client
+class RentalItem(RentalItemInDBBase):
+    pass
\ No newline at end of file
diff --git a/app/schemas/rental_record.py b/app/schemas/rental_record.py
new file mode 100644
index 0000000..43da8f8
--- /dev/null
+++ b/app/schemas/rental_record.py
@@ -0,0 +1,46 @@
+from datetime import date, datetime
+from typing import Optional
+
+from pydantic import BaseModel
+
+
+# Shared properties
+class RentalRecordBase(BaseModel):
+    item_id: int
+    customer_id: int
+    rental_date: date
+    return_date: date
+    actual_return_date: Optional[date] = None
+    total_cost: float
+    notes: Optional[str] = None
+
+
+# Properties to receive on rental record creation
+class RentalRecordCreate(RentalRecordBase):
+    pass
+
+
+# Properties to receive on rental record update
+class RentalRecordUpdate(RentalRecordBase):
+    item_id: Optional[int] = None
+    customer_id: Optional[int] = None
+    rental_date: Optional[date] = None
+    return_date: Optional[date] = None
+    actual_return_date: Optional[date] = None
+    total_cost: Optional[float] = None
+    notes: Optional[str] = None
+
+
+# Properties shared by models stored in DB
+class RentalRecordInDBBase(RentalRecordBase):
+    id: int
+    created_at: datetime
+    updated_at: datetime
+
+    class Config:
+        from_attributes = True
+
+
+# Properties to return to client
+class RentalRecord(RentalRecordInDBBase):
+    pass
\ No newline at end of file
diff --git a/main.py b/main.py
new file mode 100644
index 0000000..a7c3e92
--- /dev/null
+++ b/main.py
@@ -0,0 +1,36 @@
+import uvicorn
+from fastapi import FastAPI
+from fastapi.middleware.cors import CORSMiddleware
+
+from app.api.v1.api import api_router
+from app.core.config import settings
+
+app = FastAPI(
+    title=settings.PROJECT_NAME,
+    openapi_url="/openapi.json",
+    docs_url="/docs",
+    redoc_url="/redoc",
+)
+
+# Set up CORS middleware
+app.add_middleware(
+    CORSMiddleware,
+    allow_origins=["*"],
+    allow_credentials=True,
+    allow_methods=["*"],
+    allow_headers=["*"],
+)
+
+app.include_router(api_router)
+
+
+@app.get("/health", tags=["health"])
+def health_check():
+    """
+    Health check endpoint to verify the API is running
+    """
+    return {"status": "healthy"}
+
+
+if __name__ == "__main__":
+    uvicorn.run("main:app", host="0.0.0.0", port=8000, reload=True)
\ No newline at end of file
diff --git a/migrations/__init__.py b/migrations/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/migrations/env.py b/migrations/env.py
new file mode 100644
index 0000000..3b90ea2
--- /dev/null
+++ b/migrations/env.py
@@ -0,0 +1,85 @@
+import os
+import sys
+from logging.config import fileConfig
+
+from alembic import context
+from sqlalchemy import engine_from_config, pool
+
+# Add the parent directory to sys.path
+sys.path.insert(0, os.path.abspath(os.path.join(os.path.dirname(__file__), "..")))
+
+# Import the SQLAlchemy models
+from app.models import Base
+
+# this is the Alembic Config object, which provides
+# access to the values within the .ini file in use.
+config = context.config
+
+# Interpret the config file for Python logging.
+# This line sets up loggers basically.
+if config.config_file_name is not None:
+    fileConfig(config.config_file_name)
+
+# add your model's MetaData object here
+# for 'autogenerate' support
+target_metadata = Base.metadata
+
+# other values from the config, defined by the needs of env.py,
+# can be acquired:
+# my_important_option = config.get_main_option("my_important_option")
+# ... etc.
+
+
+def run_migrations_offline() -> None:
+    """Run migrations in 'offline' mode.
+
+    This configures the context with just a URL
+    and not an Engine, though an Engine is acceptable
+    here as well.  By skipping the Engine creation
+    we don't even need a DBAPI to be available.
+
+    Calls to context.execute() here emit the given string to the
+    script output.
+
+    """
+    url = config.get_main_option("sqlalchemy.url")
+    context.configure(
+        url=url,
+        target_metadata=target_metadata,
+        literal_binds=True,
+        dialect_opts={"paramstyle": "named"},
+    )
+
+    with context.begin_transaction():
+        context.run_migrations()
+
+
+def run_migrations_online() -> None:
+    """Run migrations in 'online' mode.
+
+    In this scenario we need to create an Engine
+    and associate a connection with the context.
+
+    """
+    connectable = engine_from_config(
+        config.get_section(config.config_ini_section, {}),
+        prefix="sqlalchemy.",
+        poolclass=pool.NullPool,
+    )
+
+    with connectable.connect() as connection:
+        is_sqlite = connection.dialect.name == 'sqlite'
+        context.configure(
+            connection=connection,
+            target_metadata=target_metadata,
+            render_as_batch=is_sqlite,  # Use batch mode for SQLite
+        )
+
+        with context.begin_transaction():
+            context.run_migrations()
+
+
+if context.is_offline_mode():
+    run_migrations_offline()
+else:
+    run_migrations_online()
\ No newline at end of file
diff --git a/migrations/script.py.mako b/migrations/script.py.mako
new file mode 100644
index 0000000..37d0cac
--- /dev/null
+++ b/migrations/script.py.mako
@@ -0,0 +1,24 @@
+"""${message}
+
+Revision ID: ${up_revision}
+Revises: ${down_revision | comma,n}
+Create Date: ${create_date}
+
+"""
+from alembic import op
+import sqlalchemy as sa
+${imports if imports else ""}
+
+# revision identifiers, used by Alembic.
+revision = ${repr(up_revision)}
+down_revision = ${repr(down_revision)}
+branch_labels = ${repr(branch_labels)}
+depends_on = ${repr(depends_on)}
+
+
+def upgrade() -> None:
+    ${upgrades if upgrades else "pass"}
+
+
+def downgrade() -> None:
+    ${downgrades if downgrades else "pass"}
\ No newline at end of file
diff --git a/migrations/versions/001_initial_schema.py b/migrations/versions/001_initial_schema.py
new file mode 100644
index 0000000..9d80ec2
--- /dev/null
+++ b/migrations/versions/001_initial_schema.py
@@ -0,0 +1,99 @@
+"""Initial schema
+
+Revision ID: 001
+Revises: 
+Create Date: 2023-10-20
+
+"""
+import sqlalchemy as sa
+from alembic import op
+
+# revision identifiers, used by Alembic.
+revision = '001'
+down_revision = None
+branch_labels = None
+depends_on = None
+
+
+def upgrade() -> None:
+    # Create category table
+    op.create_table(
+        'category',
+        sa.Column('id', sa.Integer(), nullable=False),
+        sa.Column('name', sa.String(), nullable=False),
+        sa.Column('description', sa.Text(), nullable=True),
+        sa.Column('created_at', sa.DateTime(), nullable=True),
+        sa.Column('updated_at', sa.DateTime(), nullable=True),
+        sa.PrimaryKeyConstraint('id')
+    )
+    op.create_index(op.f('ix_category_id'), 'category', ['id'], unique=False)
+    op.create_index(op.f('ix_category_name'), 'category', ['name'], unique=False)
+
+    # Create rentalitem table
+    op.create_table(
+        'rentalitem',
+        sa.Column('id', sa.Integer(), nullable=False),
+        sa.Column('name', sa.String(), nullable=False),
+        sa.Column('description', sa.Text(), nullable=True),
+        sa.Column('daily_rate', sa.Float(), nullable=False),
+        sa.Column('is_available', sa.Boolean(), nullable=False, default=True),
+        sa.Column('category_id', sa.Integer(), nullable=False),
+        sa.Column('created_at', sa.DateTime(), nullable=True),
+        sa.Column('updated_at', sa.DateTime(), nullable=True),
+        sa.ForeignKeyConstraint(['category_id'], ['category.id'], ),
+        sa.PrimaryKeyConstraint('id')
+    )
+    op.create_index(op.f('ix_rentalitem_id'), 'rentalitem', ['id'], unique=False)
+    op.create_index(op.f('ix_rentalitem_name'), 'rentalitem', ['name'], unique=False)
+
+    # Create customer table
+    op.create_table(
+        'customer',
+        sa.Column('id', sa.Integer(), nullable=False),
+        sa.Column('first_name', sa.String(), nullable=False),
+        sa.Column('last_name', sa.String(), nullable=False),
+        sa.Column('email', sa.String(), nullable=False),
+        sa.Column('phone', sa.String(), nullable=True),
+        sa.Column('address', sa.Text(), nullable=True),
+        sa.Column('created_at', sa.DateTime(), nullable=True),
+        sa.Column('updated_at', sa.DateTime(), nullable=True),
+        sa.PrimaryKeyConstraint('id')
+    )
+    op.create_index(op.f('ix_customer_id'), 'customer', ['id'], unique=False)
+    op.create_index(op.f('ix_customer_email'), 'customer', ['email'], unique=True)
+
+    # Create rentalrecord table
+    op.create_table(
+        'rentalrecord',
+        sa.Column('id', sa.Integer(), nullable=False),
+        sa.Column('item_id', sa.Integer(), nullable=False),
+        sa.Column('customer_id', sa.Integer(), nullable=False),
+        sa.Column('rental_date', sa.Date(), nullable=False),
+        sa.Column('return_date', sa.Date(), nullable=False),
+        sa.Column('actual_return_date', sa.Date(), nullable=True),
+        sa.Column('total_cost', sa.Float(), nullable=False),
+        sa.Column('notes', sa.Text(), nullable=True),
+        sa.Column('created_at', sa.DateTime(), nullable=True),
+        sa.Column('updated_at', sa.DateTime(), nullable=True),
+        sa.ForeignKeyConstraint(['customer_id'], ['customer.id'], ),
+        sa.ForeignKeyConstraint(['item_id'], ['rentalitem.id'], ),
+        sa.PrimaryKeyConstraint('id')
+    )
+    op.create_index(op.f('ix_rentalrecord_id'), 'rentalrecord', ['id'], unique=False)
+
+
+def downgrade() -> None:
+    op.drop_index(op.f('ix_rentalrecord_id'), table_name='rentalrecord')
+    op.drop_table('rentalrecord')
+    
+    op.drop_index(op.f('ix_customer_email'), table_name='customer')
+    op.drop_index(op.f('ix_customer_id'), table_name='customer')
+    op.drop_table('customer')
+    
+    op.drop_index(op.f('ix_rentalitem_name'), table_name='rentalitem')
+    op.drop_index(op.f('ix_rentalitem_id'), table_name='rentalitem')
+    op.drop_table('rentalitem')
+    
+    op.drop_index(op.f('ix_category_name'), table_name='category')
+    op.drop_index(op.f('ix_category_id'), table_name='category')
+    op.drop_table('category')
\ No newline at end of file
diff --git a/pyproject.toml b/pyproject.toml
new file mode 100644
index 0000000..6336053
--- /dev/null
+++ b/pyproject.toml
@@ -0,0 +1,31 @@
+[tool.ruff]
+# Enable flake8-bugbear (`B`) rules.
+line-length = 88
+target-version = "py38"
+
+exclude = [
+    ".git",
+    ".ruff_cache",
+    ".venv",
+    "venv",
+    "__pypackages__",
+    "dist",
+    "build",
+]
+
+[tool.ruff.lint]
+select = ["E", "F", "B", "I"]
+dummy-variable-rgx = "^(_+|(_+[a-zA-Z0-9_]*[a-zA-Z0-9]+?))$"
+
+[tool.ruff.lint.mccabe]
+# Unlike Flake8, default to a complexity level of 10.
+max-complexity = 10
+
+[tool.ruff.lint.isort]
+known-third-party = ["fastapi", "pydantic", "sqlalchemy", "starlette"]
+
+[tool.ruff.lint.per-file-ignores]
+# Allow unused imports in `__init__.py` files
+"__init__.py" = ["F401"]
+# Ignore B008 in FastAPI endpoints (common pattern)
+"app/api/v1/endpoints/*.py" = ["B008"]
\ No newline at end of file
diff --git a/requirements.txt b/requirements.txt
new file mode 100644
index 0000000..213ac84
--- /dev/null
+++ b/requirements.txt
@@ -0,0 +1,8 @@
+fastapi>=0.104.0
+uvicorn>=0.23.2
+pydantic>=2.4.2
+pydantic-settings>=2.0.3
+sqlalchemy>=2.0.22
+alembic>=1.12.0
+python-dotenv>=1.0.0
+ruff>=0.1.1
\ No newline at end of file