How to Write a Great Lease When Self Managing
As a landlord of 7 single family homes, soon to be 8, the lease is my bible. It is my key to success and the reason why I can self manage my houses anywhere. I have signed leases on a ferry between Finland and Russia in the Baltic sea. I have managed a Break Lease Fee on my last day in Abu Dhabi and through the trip back. I have handled countless repairs and other issues all over the US and through every Murphy’s Law moment that exists.
The reason for my success has been my lease. As the pillar of my single family rental success, I even wrote an entire book with my 37 addenda to help others write a great lease. It is sizable and able to scale up from a single family bible to a multi family lease bible too!
Below are the 37 Addendum that I include in my lease:
- Appliances included with the Rental
- Month to Month
- Direct Deposit
- Late Fees
- Pet Fees
- Assignment and Subletting
- No Smoking
- Entry By Landlord
- Extended Absence By Tenant
- Termination on Sale of Premises
- Lease Termination Provision for Military Personnel
- Tenant Assumes Responsibility for Maintenance
- Battery Operated Device(s)
- Steam Cleaning Carpets
- Professional Cleaning
- Keys, Garages/Gates
- Renter’s Insurance
- Break Lease Option (Buy Out)
- Pest Control
- Home Businesses
- Attic Storage
- Renting Site Unseen
- Appliance Maintenance
- Duct Cleaning
- Changing Locks
- Play Structures, Trampoline, Pools and Other Large Outdoor Equipment
- As-Is Appliances
The key to my addendums for single family homes has been to create a clear and concise rulebook. The same will be my goal for multi-family homes. You will need to edit/add/delete if your units are laid out as apartments or townhomes. I have learned the hard way if an issue comes up and it is not covered in your lease, then you are SOL unless it is covered by local, state, or federal law.
When scaling up my single family leases I plan on creating addendums to address these additional issues that would come with a multi-family home:
- Noise – I will establish a quiet hour with expectations and a financial penalty if not followed.
- Parking – I will address parking and expectations regarding guest parking.
- Trash – I will address where trash is to be placed.
- Laundry – If there is a common laundry I would address rules and regulations on use and financial penalties for misuse.
- Pets – Importance of cleaning up after them with a fine if residents don’t immediately clean up. This too would have a fine.
- Use – If I paid water, trash or if the location had prized parking, etc., I would be ultra strict on who can use the premises. The last thing you want is all of your tenant’s friends/family bring over their laundry to wash it at your house or have randoms using your dumpsters.
3 Lease Tips
- Always have a fine: I have learned the hard way so I impose a fine in my lease when it is legal. It is important to follow your local and federal laws here but imposing fines allows direct punishment. Otherwise, our only option is to evict! Eviction is a costly, sometimes lengthy process and who knows if the tenants will continue to pay rent once notice to evict has been served. On the other hand, If you have a fine, you can charge them money and still let them stay in the home.
- Always Review the Lease with Your Tenants: The point of my bible is to have an operating agreement where each side, both the tenant and the landlord, agree. Therefore, I review it in detail. I set aside an hour to go over everything with tenants.
- Leave the Lease Blank: My lease is blank. I have my tenants fill in a blank lease. This way their handwriting is throughout the entire lease. It allows there to be no misunderstandings or later– “I didn’t know that…”
Being a property manager has its up and down moments. For me the goal is to maximize my financial benefit while making real estate as passive as possible. That is possible through a strict all encompassing lease. It prevents the “Can we talk about x?” It is right there in the tenant’s own handwriting.
Don’t forget the KEY!!! This is the golden ticket:
YOU MUST HOLD THEIR FEET TO THE FIRE
It doesn’t matter how great a lease is if you do not enforce it and hold their feet to the fire. I always follow my lease and it makes things much easier. The only times I have had regrettable consequences were the times were I did not follow my lease to the fullest extent.
Author’s Note: I am nothing other than an experienced-aka-jaded landlord. I am not a lawyer or anything certified. This is not legal advice. Always check your state and local laws as regulations can differ.
– See more at: http://www.american-apartment-owners-association.org/property-management/landlord-quick-tips/write-great-lease-self-managing/#sthash.hu3xST5e.dpuf
|American Apartment Owners Association | Company Website |
At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally. Visit www.AAOA.com for more information about membership details!