If you're ready to start renting out your property to tenants, you need to create an airtight lease agreement that will protect you and your property. While agreeing to payment terms is a big part of a lease agreement, there are several other things that need to be stipulated and agreed upon in order to protect your investment property.
Keep reading to learn more about how to write a rental agreement and what you need to include in it.
The first section of the rental agreement should detail the payment terms you and your prospective tenant(s) are to agree upon. Here's the payment information you should include:
- Exact amount of rent
- Due date for rent
- Late fees for missing the rent due date, and when they will go into effect
- Security deposit and refunds
- Fees for returned checks
- Other fees the tenant will be responsible for, such as utilities
You should also stipulate which payment methods you accept, such as checks, CashApp, PayPal, or money orders.
The next section will go into specific details about the property rules. This is an important section because it's how you can protect your property from being carelessly damaged by tenants. Here's what you should include in this section of the rental agreement:
- The definition of property premises
- The definition of damage vs. normal wear and tear
- The owner's right to enter and inspect the property, and how much notice they need to give tenants
- Specific details on what can and can't be altered (hanging pictures, painting walls, etc.)
- A reminder that the tenant must inform landlord of any damage
- A reminder to not change the locks
This section should be detailed and leave no grey area because tenants will take advantage of any vague property specifics and you'll be left paying a lot more money on repairs.
There needs to be a section dedicated to lease termination that outlines if and when a tenant can terminate the lease. This section should also include any fees or penalties that the tenant will have to pay upon early lease termination. This protects landlords from having tenants end leases early without any warning which would cost landlords a ton of money.
You'll need to cover all your bases in a tenant agreement because you never know what a tenant might try to do. The more detailed you can be about rules and guidelines for your property, the better. Here's additional information you should include in your lease agreement:
- Are overnight guests allowed? How long can guests stay?
- What parking is included?
- Are pets allowed? If so, what kind and how many? Will there be pet fees or deposits?
- How many keys are included?
- Specific neighborhood or community rules
- Noise ordinances
- What can be stored on-site?
- Can tenants sublet rooms?
You should also stipulate what will happen if any of the above rules are broken by the tenant.
Make Sure Your Lease Agreement Complies with Laws
To protect yourself as the landlord, you need to make sure your lease agreement follows federal, state, and local laws. For example, you need to follow anti-discrimination laws, health and safety codes, occupancy laws, and disclosure requirements.
You can work with an attorney or a property management company to make sure your lease agreement is airtight and does not leave you liable.
How to Write a Rental Agreement: Get Help From the Pros
Learning how to write a rental agreement is only the first step. Actually creating one and making sure it's completely airtight and protects you and your property is difficult to do unless you have experience.
That's why you should work with a property management company that knows exactly what to include in a lease agreement.
Here at Professional Real Estate Management, we will not only create a lease that meets your standards and complies with the law, but we'll enforce the lease to ensure your property is always protected from damage. Contact us today to learn more about our lease agreement and property management services.