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The standard form lease
Most property investors are familiar with a standard-form lease, and are comfortable utilizing them. A standard rental agreement can be obtained quite easily online. Many styles are available using any number of traditional Blumberg leases (blumberglegalforms.com).
The lease form will cover the basics of the rental itself – lease dates, rent to be paid, when it will be paid, security deposits as well as what happens in the event of accidents. However, it’s always good investment property advice to tailor a standard lease document to help spell out exactly what will occur (read: consequences) if the tenant doesn’t perform his part of the rental agreement.
Making things as clear as possible will help avoid unnecessary squabbling between you and your tenant, and will help protect you should you have to take legal action in the future. So try to answer most of the following questions regarding your specific requirements in a lease, and be sure to go over these particular lease items with your tenant prior to signing:
Changes to the unit (alterations)
If your tenants plan on putting up some shelves, add or change out a light fixture, add plantings, etc., make sure they get your permission to do so first as part of your lease. It should also be spelled out that you will be the sole determiner if they are to return the unit to it’s original state when they moved in.
Rent due on the first of the month
Make sure to spell out if there will be any grace period, and exactly how the rent will be collected – in person or by mail. If by mail, add a date in which it needs the rent check needs to be in the mail each month.
Use of premises
How many people of the same family will be allowed to live in the unit? What about unrelated tenants? Good investment property advice says you should state exactly who will be occupying your unit. Can additional tenants be added to the lease? How will you be able to check? (You certainly need to be able to ascertain through regular visits…)
Additional rent clauses
Will there be any automatic renewal of their lease? Or must there be notification by the tenant and/or you as the landlord? Will there be any automatic bump-ups in the tenant’s rent for years two and on into the future?
If thy don’t pay, or if they damage the unit, or violate the lease in any way, this clause allows you to collect the full amount due for the remainder of their rental period. It is rare to find a tenant who will accede to this demand, but it’s worth asking for.
When and how will security be returned? How long will you have to return the security after they move out? If you can, try to allow for up to 30 days in which to return a tenant’s security deposit to allow you time to check on the condition of the unit after they vacate. In addition, are you asking for a separate security amount for a pet that you’re allowing? If so, be sure it adequately covers you in the event of damage from the pet.
Residence, business – or both?
If they will be running a home-based business, make sure it is legal to do so in the neighborhood your rental property is located. Check your local zoning laws to be absolutely certain before allowing the tenant the right to run their business from your building.
Be sure to ask for everything that will protect your interests and the building itself. Play it safe – you can always give back a lease term or two if it means snagging a great tenant. But always be wary, and be in self-preservation mode in every lease you sign with a new tenant. That’s just simple, straightforward investment property advice.
photos courtesy of buffsseptember2010photochallenge.blogspot.com, trexglobal.com, jmpm.co.nz, easyinsure.ca, worsleyhomes.co.uk, thegreatestrealestateblog.com