Are you ready to finally sign over your rental property to your tenant? It’s now time to take care of all of the paperwork for your rental property.
There’s no such thing as a handshake agreement when it comes to real estate. I 100% am against doing business with family or on relying on some sort of a personal deal. This could work in the perfect world. In the real world, it’s just not going to happen. You need to take care of the legal documentation.
I know that I sound like a broken record, but your rental property is your greatest investment. You need to protect it. This is why you need a bulleftproof rental agreement. You need to take care of your paperwork before you hand over the keys of your unit.
What’s a lease agreement all about?
The lease agreement is going to contain the basic information for both parties. Every single bit of discussion that you guys have had needs to be mentioned in this document. This will protect both parties.
The lease agreement is also going to contain the important details about your situation. The complexity of this agreement will depend on the type of property that you plan on using to generate rental income. I personally believe in simple condos. If you want to get into multi-unit homes and commercial property, you’re going to need a much more complex agreement.
This should include all of the following items:
- The monthly cost of rental.
- Location of the unit.
- Primary and emergency contact information for both sides.
Now that you know what the lease agreement is all about, you need to know what to watch out for.
What should you watch out for in the rental agreement?
You need to figure out a few things together. How you decide on the details should be based on the market and any sort of personal deal both parties come to. I personally found that I could charge $1, 400 with utilities being extra. I could get away with this because it’s a downtown property. You obviously couldn’t charge as much in some sort of a rural community.
The specifics you need to watch out for with your rental agreement include:
- Who will pay for damages?
- Can one party back out of the deal?
- How will damages be dealt with.
I must really stress that you need to put everything that you guys discuss into the agreement. Every little piece of details need to be on paper. If it’s not on paper then it doesn’t really count because there’s no proof of it.
Do you need any more documentation?
You can technically create another document between yourself and your new tenant. The point of another document is to outline how both parties plan on dealing with certain possible outcomes should they occur. For example, you can set limitations on what the tenant can and can not do within the unit. If you don’t want a wall painted then you can put this into the agreement. You can really put anything that both parties agree on. Will you allow the tenant to sub-lease the unit if they want to go away for the summer? Will you give the tenant some flexibility if they can’t come up with their rent? These are all questions that need to be addressed at the beginning, not as they arise.
On the other side, this is all information that can be placed into the original rental agreement. You don’t need to create a separate piece of documentation if you don’t feel the need to.
Where can you find this paperwork?
There are many options for finding the proper paperwork. The good news is that you don’t have to come up with an agreement from scratch. That would be far too time consuming.
Here’s a sample lease agreement from my part of the world. All you have to do is Google “sample lease agreement” and try to find one that you think is the best. All of the templates are out there. It’s just a matter of finding the right sample lease agreement.
I really hope that you take the paperwork for your rental property seriously. I don’t want to doubt anyone but you really need to protect yourself. You never know when you’ll get hit with the tenant from hell. You don’t want to be screwed over by some highly unethical person.
Check out the rest of the Landlord’s Starters Kit:
Do You Want to be a Landlord? Let’s Look at Every Cost Involved
Is Buying a Rental Property Passive Income?
How Do You Become a Landlord?
Should You Hire a Property Management Company?
How to Find a Tenant For Your Rental Property.
