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An excellent rental estate investor is a master of the art of attracting good tenants to a rental property. However, it is not the only keystone of making one’s name among the top real estate investors. What is equally, if not more, important is to retain tenants and to make sure that they remain consistent and trustworthy.
The ideal situation in such a case is to find such tenants who pay their rent on time in total and occupy the property for relatively long-time fame, without making it look like a haunted house.
However, before starting your search for the perfect tenants to rent your property to, it is of utmost importance for you to take some time out to craft a sound rental lease agreement. Once you have done just the thing, you will find yourself prepared and all set to hitch that golden rental and will also find yourself at ease in terms of coping with nightmare tenants that you otherwise had to.
Of course, before you start structuring your leases, you want to start by making sure you have properly structured your mortgage to ensure your rental is going to succeed. To learn how to do that and more click the link below for a free strategy call with our team at LendCity.
The rental agreement is the key
A resilient, thoughtful, and well-crafted rental lease agreement is the key to success for any real estate investor. Once they get the proper know-how of constructing a purposeful rental lease agreement, the real estate investors will discern that they have hit the jackpot.
Rental lease agreements provide a clear set of outlooks to both tenants and the property owners. This develops a mutually agreed-upon understanding between the two parties, which fosters a strong and healthy relationship between the tenants and the landowners.
If you are on the lookout for a good, reliable, and consistent tenant to inhabit your investment property with, constructing a purposeful rental lease agreement with clear and consistent guidelines dictating the behavior you expect from your tenant can simplify your search for the ideal residents.
Rental agreements also help alleviate legal liabilities so that you can ensure that your investment business is functioning- above board.
Consult an expert
To craft a compliant rental lease agreement, make sure to consult an expert before setting up the terms and conditions.
This is because rental rules and regulations vary significantly from province to province and even from city to city. So, it is best to acquire the services of a trusted real estate attorney to draft your rental agreement.
Despite the variations in the rental lease agreements that occur majorly on an inter-city basis, there are several universal characteristics seen in all good lease agreements. To have cognizance of these traits is a plus point when you’re drafting a rental agreement for yourself.
After drafting yourself a rental agreement, you can further polish it by consulting experienced real estate investors working in your region.
Discover How To Deal With Difficult Tenants With This Step By Step Guide
What to include in a rental lease agreement?
When it comes to crafting a rental lease agreement, several things are vital to be included, irrespective of the location of your investment property. While many other items can be personalized, such as the tenant’s behavior as expected by the property owner, some things have absolutely no exception. For example, the address and the unit number of the property are a must for drafting a rental lease agreement.
Even though these might seem petty things, they can limit potential legal liability if there is a dispute in court.
Payment and fees
The rental agreement must highlight all the payment-related information regarding the residential unit under consideration.
These include the monthly rent and the initial deposit, and any other fee which may incur. In addition to these, the rental agreement should also outline the methods of payment from which the tenant can choose their most favorable one, along with the monthly due dates for rent payment.
Moreover, any fine which may incur late payment by the tenant must also be specified therein.
Liabilities and responsibilities
Another vital point that must be stipulated in the rental agreement is the tenant’s responsibility to take care of the rental unit. Even though some wear and tear are inevitable during the duration of the tenancy, it is best advised to specify the limits.
Furthermore, any inevitable damage which may lead to charges upon move out is to be mentioned. Lastly, it should also contain a reminder for the tenant not to change the unit’s locks without prior notice and that you are to be informed in case of any severe damage to the rental unit.
The rental lease agreement must also contain ways in which the tenant can pay for his utility expenses.
Nowadays, modern apartments are equipped with separate meters for electricity and gas. If your case is similar, you will have to consider requiring your tenant’s account information with the local hydro provider on the rental lease.
However, suppose your case is dissimilar, and your property does not have individual meters. In that case, you will have to specify how your tenants will be charged for their water, gas, and electricity.
Illegalities and safety concerns
Another essential thing to include in your rental agreement is prohibiting any illegal activity on your property. Restrictions on the usage of drugs and other illegitimate activities are to be specified therein.
Even though it may seem a bit extra, it is a precautionary measure to alleviate potential legal liability.
In addition to this, make sure to outline local health and safety codes to clarify that the tenants will violate lease terms if the regulations aren’t abided at your property. This is majorly relevant for smoke and carbon monoxide detectors. You will also have to edict landlord inspection procedures.
Property specific items
Furthermore, the lease agreement should cover any supporting situations related to the property and rental unit. For instance, if parking is included in the unit, this should be mentioned in the rental agreement.
Similarly, if your tenants have a furry family member to bring along, draft a separate pet addendum for that as well.
As the property owner, it is your right to be timely informed of anything affecting either your property or your tenant’s ability to pay rent. Many rental leases have separate addendums for notification clauses. For example, if your tenant has to go out of the station for XYZ days, they will have to inform you of their absence. Similarly, if they lose their job, they will have to notify you, as both cases can delay payment of rent.
However, it must be kept in mind that only those clauses should be incorporated into the rental unit. Adding any clause which invades the tenants’ privacy should be refrained from under all circumstances.
In addition to incorporating compliant terms and conditions in your rental lease agreement, there are several other ways to make your property more attractive. For instance, if you have a security system installed at your building, it would be a plus to ensure safety and minimize any potential property damage. However, ensure to include clear instructions regarding the maintenance in your rental lease.
Lastly, regardless of the type of tenant lease you are drafting, it is of pivotal importance to work with a trusted real estate attorney. This will ensure the minimization of unnecessary financial risks and save you from potential lawsuits, in addition to helping you with handling situations in case the tenant breaks any rule.
So, if you are ready to get started, let us get you set up with a well-structured mortgage by clicking the link below for a free strategy call today.