Landlords benefit from having a passive income while they go on with their lives. As long as the space is well-maintained, they shouldn’t have any problem with their properties. They can travel the world while receiving the rent through their bank accounts. They can hire a rental property manager to manage their rentals. They can focus on their careers while also earning from their rental properties.
But a landlord needs accountants to maintain and manage the rental property. The accountants will balance the sheets and compute the expenses vis-à-vis the profit the property is making. This way, you won’t be spending too much on the maintenance of the property that’s not making a profit anymore.
Although owning rental properties is generally a great investment, it does come with some problems. When the leasing agreement isn’t iron-clad, tenants can get away with unacceptable behavior such as not paying the rent or not taking care of the rental space. The lease contract is meant to protect you. It should be well-written, and the terms should be clear to the landlord and the tenants.
Get Legal Counsel
The law is complex about lease agreements. You need an iron-clad agreement to make sure that your rights as a landlord are well-protected. Consult a lawyer to avoid making the common mistakes that landlords do with their contracts. An experienced tenant with a lawyer-friend can use the weak points of the contract against you.
Picture this scenario: the terms in your contract about the security deposit isn’t at all clear. Are you going to give it back? Is the security deposit going to be used for repairs and cleaning after the tenant moves out? You assumed this was already a foregone conclusion.
Still, after a contract ends, the tenant goes to you with a lawyer in tow, demanding for the security deposit. What happened? What happened is that the lawyer found a loophole in your contract. Because the terms are unclear that you can use the security deposit to repair the unit, you are now out $1,000 because you have to give it back to the tenant.
Customize a Lease Template
So you don’t want to write your own contract. Of course, that’s too much work, and you don’t really know what to put there. You decide to download a template from the Internet. It looks fine, but there are a lot of blanks to fill out there. Make sure to customize the contract according to your specific needs and terms.
Next, get a lawyer to review the contract. Make changes according to the recommendations of the lawyer. It is cheaper to consult a lawyer with an already written contract as opposed to hiring a lawyer to write the contract from scratch.
Stick to the Contract
You’re the one who had the contract drawn up. You need to follow its terms and conditions. That includes not agreeing to anything with the tenant verbally. If there is no term in the contract about not honoring verbal agreements, then you might be legally bound to follow something you loosely verbalized.
Make sure that it is indicated in the contract that all changes in the agreement must be in writing. Otherwise, the tenant will take your word and use it against you. Consult the contract every time clarifications have to be made.
Finally, look at your tenants’ credit histories. Do a background check before you agree to lease a unit to the tenant. You’ll have a much easier time if you can be sure that your tenants have good credit history and recommendations from previous landlords.