The percentage of Americans who are renting their home or apartment has reached the highest rate in 50 years. As the cost to buy goes up and more adults relocate every few years for work, renting becomes a better option for more households.
That means that this is a great time to lease out one of your own properties. At Reedy and Company, we make it easy for property owners to grow their assets without investing their time by using our property management services. Our expertise makes your job easy.
Today, we’re going to take a closer look at rental agreements. If it’s your first time creating one, you may not know what should be included.
Read on for six things that you should always include in your rental agreements to ensure that renting goes smoothly.
It is recommended that you specify acceptable modes of communication between your tenants and either you or your property manager. This may seem superfluous, but it can make communication easier and safer.
Ultimately, we always suggest that rental agreements include a clause that states that vital communication must be done in writing. In the modern-day this, of course, translates to email. Everything from complaints to maintenance requests to move-out requests should be recorded in writing.
Why is email better than a text or a phone call? Email is easier to document and organize. When well-managed, email communication ensures that you have written records of all important communication between you and your tenant.
Your rental agreement should always include a clear description of the property. What that means is that the rental agreement should state the address of the property, at the very least. You can also include things like the number of bedrooms and bathrooms, type of rental property (ie single-family home vs studio apartment), and square footage.
If your rental includes access to additional properties, such as a detached storage unit, laundry room, or gym facility, you should also state this in the rental agreement.
It is also important that you fill out the rental dates that you and the tenant have agreed upon. This includes a move-in date, move-out date, and pertinent information about lease termination or renewal.
Your rental agreement should clearly state not only the amount of rent owed but also the due date each month. If relevant, you can also specify acceptable methods for tenants to use when paying rent (ie checks, cash, or an online portal).
This is also when you will need to cover any deposits your tenant will owe. Most landlords do charge a security deposit upon move-in that will be returned to the tenant if they do not cause damage during their tenancy. Security deposits are most frequently equivalent to one month’s rent.
You should also specify any fees that a tenant may accrue during their stay. For example, you might charge a late fee if rent is not paid on time. You may also charge additional fees for things like lock-outs, noise complaints, and so on.
Your tenant has a right to a functional, safe home. That means that it is your responsibility to ensure that all maintenance and repairs are taken care of in a timely fashion.
However, not all issues warrant a call to you or your property manager. It is best to specify in your rental agreement what kinds of issues you will take care of and what the tenant should take care of, themselves.
For example, if the refrigerator stops working, this is usually grounds for the landlord to handle maintenance. However, it is a tenant’s responsibility to change lightbulbs, clean up after themselves, and perform other basic maintenance tasks.
You may also want to protect yourself from paying for tenant-caused damage. For example, if a window cracks during a hail storm, that is not a tenant’s fault. If a window cracks because a tenant throws something at it, that is damage the tenant should pay for, even if you set up the appointment.
We tend to assume that we don’t need to address illegal activity because it’s, well, illegal. After all, if someone breaks the law, can’t you call in the authorities?
While the answer is yes, it is still beneficial to include restrictions against illegal activities in your rental agreement. This makes it easier to terminate a lease without involving law enforcement if a tenant is participating in illegal activities. Plus, it can help protect you from potential lawsuits.
Illegal activities you may want to name in your rental agreement include doing or dealing illegal drugs, making excessive noise, or owning illegal pets.
Finally, a rental agreement gives you the opportunity to set the rules for your property. While you don’t want to go overboard with restrictions, there are some that you may want to consider. Common leasing restrictions include:
You don’t want your rental terms to be so severe that people don’t feel at home in your properties. However, a few well-chosen restrictions can protect you and your property from expensive damage.
Now is a great time to start renting out your properties but not every property owner has the time or energy to take on the role of a landlord. That’s where we come in.
Reedy and Company offers property management services that cover everything from creating rental agreements to move-out inspections. We become the go-to for both you and your tenants so that you can rest assured that your properties–and your interests–are well taken care of.
To find out more about how we can help you manage your properties, contact us today.
