If you bought a home with the idea of renting it out, you could be well on your way to making the kind of passive income that many people only dream of. However, life as a landlord can be tricky if you’re not well-prepared. Simply put, some tenants can be a nightmare.
So, to ensure your assets are protected and you are, as well, here are some things to consider when writing a lease agreement so that both you and your tenants are taken care of and protected:
Read more: 5 Ways to Profit from an Unwanted Rental
1. Write an outline of things that you want in the lease
Before you set out to write your lease, it’s helpful to write an outline with any relevant information to include in your lease so that you can be sure to protect your property while also allowing your tenant to be protected as well. Many landlords incorporate items such as the number of people allowed to live there, the rights and responsibilities, the terms for ending a lease agreement, and much more.
Keep in mind that while the lease will be a legally binding document that can help protect both you and your tenant, you’ll want to do your due diligence and consider doing a credit check for landlords and tenants. By doing a credit check you can be sure you’re covering all of the bases.
2. Consider getting help from a lawyer
If it seems a bit overwhelming to put a lease together on your own, it could be a bit easier to reach out to a lawyer and get some help so that you can be sure you’re creating a lease that allows you to protect both yourself as the landlord and protects your tenant as well.
Remember that you want to rent out your property, and a lease that isn’t protecting your tenant probably won’t appeal to potential renters. Anyone in the legal field can probably help you understand the local laws and help you create the ideal lease agreement that is good for you and the tenant.
3. Avoid confusion – clearly define property boundaries
Something you want to include in your lease is the actual property that you’re renting out. This is especially true if you’re someone with an extra building on your property that you have for rent, but you want to ensure your personal space isn’t infringed upon.
If you have parts of your property that don’t want to be disturbed and aren’t for use by your tenants, clearly define property boundaries to help you and your tenants avoid confusion and ensure you keep your property safe.
4. Include lease term information
There’s a lot that you want to include in your lease, but one of the most important things to include is how long you’re renting out the property. You may think it is obvious knowledge, but some landlords have forgotten to include the exact date of when a lease agreement ends for their new tenants.
Also, in some cases, there could be confusion about whether there’s a month-to-month option for those who may not want to sign a full lease but want to have the flexibility to stay longer as they look for a new place.
5. Include rent amount, payment day, etc.
To be sure there’s no confusion on when the rent is due and how much you’re charging, don’t leave details solely for verbal communication. With payment due dates, rent has to be paid clearly to more easily avoid late rent payments or any issue with not receiving the full amount. Consider whether or not you allow for a grace period for your tenants. It could be helpful to allow a couple of days for your tenants to pay their rent.
If you invested in property to rent out, ensure you cover your bases with the lease agreement. While renting out your home can be a lucrative decision, it can also bring a host of problems if you’re not careful. A lease agreement can help with this!