Renting property is now one of the best ways to earn money off your property - unemployment and housing crisis have led to less and less people buying homes. Many college students are also avoiding purchasing a home and they choose renting.
Renter households made up 32% of households in US and this number has only grown, especially in big cities like New York and Los Angeles where it's often more than 50%.
If you are a landlord, one of the most important documents for you is the lease agreement. The lease agreement is the legal agreement between you and your tenants that live in that space. It defines the rules and consequences of breaking those rules.
This agreement helps both renters and landlords define their relationship and have something to protect them in case the agreement or the rights of either party are broken.
Here are the most important elements your lease should have if you want to maintain a good relationship and define as many elements of your agreement as possible.
The most important elements:
Parties to the lease - name the landlords and tenants
Describe the property - list the address and the number of the property so it can be identified if issues arise
Rent terms - this is the amount of money that should be paid for the rent and the due date of the rent should be there as well
Lease start and end - set the dates when the lease starts and the date when the lease ends. There should be a description of how and when you plan on ending the lease - for example, mention how much of a notice they have to give and what they have to pay before terminating the lease.
Details about the security deposit - this is the amount of money that is paid beforehand and you should describe how it's supposed to work.
Names of people who will live there - the agreement will need to list all of the people that will live in that property on a regular basis.
Details about pets - the lease needs to specify if the tenants are allowed to have any pets or not and what are the terms of having a pet.
Repairs - there should be a note on the condition of the property and the tenants and the landlords responsibilities in the sense of repairs, problems, damages and so on.
Changes to the property - the lease needs to describe which changes can be made by the tenants to the property while they are there.
Right of entry - "The lease should contain a clause which would allow the landlord to enter a property and inspect it but with reasonable notice before that. This should all be defined because of the rights of the tenant," says Joan Goodwin, a business consultant at Thesis Writing Service and Paper Fellows.
These have been some of the most essential terms of the lease agreement and what it should contain. However, if you want to bring it to the next level and improve it to be more protective of your rights and the tenants' rights, you can add the following items:
Lease renewal rights - if the tenant has a right to renew the lease upon ending of the lease, this should be defined in the lease agreement. It should be signed each time a tenant renews the lease.
Rights to sublet - the lease should specify if the tenant is allowed to sublet the property to other people and on which terms.
Parking - If there is parking in the area that belongs with the property, the lease should specify the terms of parking in the agreement.
Possessions - if certain objects are not allowed on the property, it's best to specify which in the agreement. These can be barbecue, water beds, grills and so on.
Rules of the property - "If there are multiple units in the property, there should be rules specified in the agreement. For instance, not making noise after 10 pm or not hosting loud parties and so on.," says Annelise Benson, a marketing manager at Academized and AustralianHelp.
Many of these are optional and not really a vital part of the agreement but they can bring it to the next level and define all of the terms much better so both tenants and landlords are safe against issues. You can also hire a real estate lawyer to help you with local laws, rules and regulations. Hopefully, these tips can help you create a great lease agreement.