1. Sticking with the story - as the creator you must create limits and restrictions. Even a Fictional World has limits; you need to avoid a Fantasy Kitchen Sink so not to confuse audiences. Mixing fantasy and science is good, but don't go overboard. Stay within the limits you set for your story.
2. Decide what the legend is. Perhaps it's a rumored website that kills those who use it, or something about going out at midnight and disappearing. What the legend is depends on setting, plot and story. If you want a believeable legend, be realistic but also incorperate the fantasy and mystery elements of most Urban Legends.
3. Person, monster, god, demons? - Is the legend about an ordinary human, a monster or an object?
4. Whats This Button Do? - What's the legend have to do with the story? Do the characters meet/confront it, decide to help, defeat it? What impact does the legend have on the characters' life/lives? Does it effect society? Does it Change The World?
5. All Myths Are True - If a story has multiple urban legends are all of them true?
Examples of Urban Legends come true
- Hell Girl - Go to Hell Link, submit the name of the person you hate and they'll be sent to Hell
- Durarara!!!! - The Headless Rider, The Dollars
- Devil Survivor 2 - Nicaea, the website where you can see a persons death.
- Persona 4 - The Midnight Channel, look into a turned off TV at midnight on a rainy night and see your soul mate (yeah right).
- Persona 2 - Dial your own phone number and you'll meet JOKER