{"id":17838,"date":"2020-01-09T08:48:59","date_gmt":"2020-01-09T14:48:59","guid":{"rendered":"https:\/\/www.abodo.com\/blog\/?p=17838"},"modified":"2020-05-14T08:37:34","modified_gmt":"2020-05-14T13:37:34","slug":"the-perfect-lease","status":"publish","type":"post","link":"https:\/\/www.rentable.co\/blog\/the-perfect-lease\/","title":{"rendered":"The Anatomy of a Great Lease & Finding the Perfect Tenant"},"content":{"rendered":"

There are many reasons you may find yourself as a landlord. You may have moved into a new home and are looking to rent out your old home instead of selling it. Or, you may be wanting to <\/span>break into investing in real estate<\/span><\/a> to diversify your portfolio.<\/span><\/p>\n

Regardless of the reason, you could <\/span>stand to make a decent profit<\/span><\/a>, while also building equity in the property since your tenant will be paying the mortgage through rent. But, you\u2019ll want to make sure you have the basics down before getting too far in \u2014 and that starts with having a solid screening process and a good lease in place.<\/span><\/p>\n

Screen Tenants<\/strong><\/h2>\n

You\u2019ve heard the horror story about your co-worker\u2019s cousin\u2019s step-dad Marty who had that awful tenant who was three months behind on rent and left the home destroyed, right? Next time, ask your co-worker what process Marty used to screen potential tenants before moving them in.<\/span><\/p>\n

Sure, there\u2019s always the chance someone will apply to live in your rental<\/a> home who is highly skilled at cheating the system. They may be able to ace the screening process and share a heart-wrenching story, only to later get behind on rent, refuse to comply with the lease, or be an all-around horrible tenant.<\/span><\/p>\n

But generally, you can avoid these types of renters by weeding them out of your prospective pool early by using a thorough screening process and sticking to that process each and every time. By doing this, you\u2019ll take intuition and emotions out of your decision to approve or deny, also helping you avoid any discrimination lawsuits in the future \u2014 which are becoming more and more common.<\/span><\/p>\n

Screening tenants may be the most important part of being a successful landlord. To properly screen tenants, a landlord should \u2014 at a minimum \u2014 always run a background check, call past landlords, run a credit report, and confirm employment.<\/span><\/p>\n

You may even wish to come up with minimum qualifications \u2014 especially for things like a credit score or monthly income. A good rule of thumb is that a tenant should make three times your monthly rent charge in income. This ensures your tenant has the ability to pay rent each month and their funds won\u2019t be tied up in paying off other debt obligations.<\/span><\/p>\n

Process tenant applications or a\u00a0rent application<\/a> on a first-come, first-served basis to again avoid those expensive discrimination lawsuits. If you find a potential tenant that doesn\u2019t meet your qualifications, document the reasons they were denied and let the tenant know as soon as possible.<\/span><\/p>\n

Hire a Property Manager<\/strong><\/h2>\n

As you can see, being a landlord is not for the faint of heart. And if you\u2019re the empathetic type and likely to be swayed by an emotional story, you may be better off hiring an experienced property manager to take care of everything. Or, if you live out of state, a local property manager is essential.<\/span><\/p>\n

While you still own the property and generate a profit, the property manager handles the day-to-day needs of tenants and the property \u2014 and this often includes screening tenants and moving them in. In the unlikely event that you need to evict a problem tenant, they can help with that also.<\/span><\/p>\n

If a pipe leaks or light switch doesn\u2019t work, the tenant contacts the property manager instead of you. The manager will then send over an in-house or third-party maintenance person to make the fix \u2014 billing you for both their time and any replacement parts (and potentially an added percentage.)\u00a0<\/span><\/p>\n

As a base rate before any maintenance calls, property managers usually charge around 8% to 12% of gross monthly rent in exchange for their service. They may also charge an added \u201cleasing fee\u201d for moving in a new tenant \u2014 in the ballpark of one-month\u2019s gross rent or a portion of it. If you don\u2019t have experience with this, it may be well worth the money and save you future headaches!<\/span><\/p>\n

Writing the Lease<\/strong><\/h2>\n

The second piece of the puzzle is writing an airtight lease that adheres to any local or state <\/span>, but it is always a good idea to consult a lawyer to make sure you catch everything, and that the lease is up-to-date with any changes in the law.<\/span><\/p>\n

It is essential that the lease cover payments and fees, due dates, security deposits, a disclosure agreement, a delivery of possession agreement, maintenance, and liability. You\u2019ll also want to lay out who is responsible for paying utilities, the length of the lease, what happens when it expires, how many can reside in the property, if pets are allowed, and if so, how many. If you\u2019re <\/span>, you may want to check with your HOA agreement to make sure you adhere to all its rules as well.<\/span><\/p>\n

If you\u2019re renting to multiple tenants in the same property, think through how you want to structure their leases. The most common way is to include all names on one lease with all tenants signing at the same time. If this is the case, each tenant can be negatively affected by the others’ actions. For example, if one tenant fails to abide by the lease or is late on rent, all parties will face eviction.<\/span><\/p>\n

However, some landlords \u2014 usually in apartment complexes \u2014 may allow each tenant to sign their own lease. While this means you only have to deal with evicting one person, you\u2019ll want to lay out in writing what this means when that person is no longer around to pay rent. You\u2019ll either be shorted on rent going forward, or \u2014 if you require the remaining tenants to foot the bill or find another roommate \u2014 there could be even more trouble.\u00a0<\/span><\/p>\n

You may think that certain items are common sense, but always include them. (No, you don\u2019t want your tenant renting out one of their rooms on AirBNB<\/a>, partying on the roof, or running a daycare on the property without your permission.) It\u2019s much easier to deal with a disagreement \u2014 or evict if it comes down to it \u2014 with a lease that clearly lays out all your expectations in writing.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

There are many reasons you may find yourself as a landlord. You may have moved into a new home and are looking to rent out your old home instead of selling it. Or, you may … <\/p>\n

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