How to Create a Lease that will Benefit Both Yourself and Your Tenant
For many real estate investors, finding the right lease for rental property can be overwhelming, however, once that part is done, finding a great tenant – and keeping them for an extended period of time can sometimes feel even more stressful. The reality is that there is almost an infinite number of templates available online, many of which are for different purposes – think about it, you can lease pretty much anything – cars, furniture, artwork…etc….
In order to create a lease that benefits both yourself as the landlord and investor, and your future tenants you will want a lease that is legal, clear and lays out all expectations point blank – leaving no questions unanswered.
Here are some great tips to creating a lease that will benefit both yourself and your future tenant.
Does it Clearly Explain and Define the Nature of Your Relationship?
One of the most important functions of a lease is that it communicates what the relationship should look like between the landlord and the tenant. As a landlord, you really want to demonstrate the core values of your operation and also explain how things should happen.
Remember: A Good Lease is Designed to Keep You Out of Court
Really, by the time you, the landlord, take a tenant to court, you’ve already lost in a lot of ways. In terms of unpaid rent, legal fees, and having to deal with a bad relationship, there has already been a major blow to your profit and stress level. The best thing by far is never having to actually go to court.
While it is important to create a lease that benefits both parties, it is important to keep the fact that it is, in fact, a legal document, at the forefront of your mind while in the creation process.
Keep It Fair for All Parties Involved
While it can be easy to focus only on what you as the investor want in terms of price, expectations, rules…etc…. If you are looking to draw up a lease that will attract the right kind of tenant – and keep them around – you will want to keep their needs in mind too.
Some things to consider when asking yourself if your lease is fair for both parties include:
-For example, are your late fees reasonable? Do you give reasonable notice of changes to the terms/renewals?
-Do you layout (in detail) what your tenant can expect from you? Things like monthly or bi-monthly property visits, lawn maintenance…etc…should be detailed in your lease.
-Do you follow the appropriate protocol for security deposits?
Keep in mind that these tips apply whether you manage the property yourself or through a property management company, the lease in question should outline where they can send rent, how complaints are handled, how they can contact you, and how they can request maintenance. Overall, a strong lease will describe what communication will be like between you and your tenant – and provide a clear line of communication.