If you have a property that you are interested in renting out, you should make sure that you know everything there is to know about the business and the measures you have to take to protect your property.
The most important of which is the rental agreement, this agreement is crucial in ensuring that the property will be taken cared off and the terms in which the tenant and landlord agree to abide by within the contract period. Without a rental agreement, the tenant and landlord may not be able to resolve disputes in the proper way and may cause problems in the future. As a landlord, there is potential to make good money out of the properties you rent out however, without a clear and valid rental agreement, a gold mine might become a disaster in the future. Thus, if you are new to this business, then you should take the time to learn everything that you can about rental agreements.
State Specific Rental Agreements
Different states have their own laws and policies regarding the landlord and tenant relationship, and there are important variations for each state. The state governs the contracts entered into by its constituents and enterprises, thus in order for a rental agreement to be valid it has to be in accordance with the state guidelines and laws. So it is advised that as a new landlord, you should get to know the state specific laws that apply to rental agreements, so that when you ask your lawyers to draw up the rental agreement you actually know what should be in there and what should not be there. Moreover, you need to choose a firm that would work for you in providing state specific rental agreements as they will be more tuned to the needs of the client.
Robust Rental Agreements
Rental agreements are necessary for the protection of the landlord and the tenant, it identifies and clarifies the coverage and limitation of the contract as well as the duties and responsibilities of both parties. It is important for the protection of the landlord against problematic behavior of the tenant, for example if he or she fails to pay rent, or any damage to the property is incurred by the tenant or the refusal to evict from the property. The contract is legally binding and the landlord can take legal action against the tenant if it comes to it. The tenants’ rights are also protected in the agreement in terms of what he or she is entitled to like the cost of repairs, the availability of utilities, safety and security in the property and the limitations of their rental like whether pets are allowed or not, renovations or any changes to the structure of the property and the like. You would need a robust rental agreement that would include all of the following and any other addendums that the state requires.
Different Rental Types
The rental agreement is often differentiated by the duration of the rental contract and the kind of space that is being rented out. In terms of duration, rental agreements can be on a month by month basis, it could be semi-annual and annual or a long term lease of about three to five years. The most common is the monthly arrangement, but the rental agreement is said to be renewed monthly at the end of each month or the payment of the month’s due. Most students and young professionals would prefer this arrangement as it is easier to maintain and if ever they decide to move or rent in another area, there will not be any issues with having to terminate the contract or to lose money for not completing the contract. On the other hand, professionals or new couples who are looking for stability and roots would rather go into long term lease or rental agreements. Long-term lease are a bit more cost-effective than month to month rates as you will have to pay for the entire duration of the agreement. It also provides security for the tenant as they cannot be asked to move out from the property at the whim of the landlord. A special kind of rental space is the vacation rental, which is basically renting out a property for the duration of the vacation which could be from overnight to a month. A vacation rental also has specific guidelines and this should be reflected in the rental agreement as it includes the use of the furniture, appliances, pools, beach house or any other amenities in the vacation house.
Another type of rental agreement is based on the kind of space that is being rented out. The most common of which are residential spaces such as pads, apartments, lofts, houses and condominiums, other spaces also include shops, warehouses, buildings, office space and others. Then there are storage and garage spaces that tenants want to have to store their valuable or old things that they do not want to part with. The rental agreement has to identify and specify which space or property is being rented and where it is located. Moreover, there should also be information regarding the dimensions of the space and what other part of the property is included in the contract, say if the house has a guest house or a pool, or if the building includes access to the rooftop or basement and the like. A good rental agreement should be comprehensive and be acceptable to both landlord and tenant. If in case the landlord wants to put in a certain clause or limitation to the contract and the tenant does not think it is acceptable, then the agreement will not push through until they can come to terms that are both acceptable to them. Although it is always the purview of the landlord to put in the terms that he or she wants but no one would rent your property if it is too strict or limiting.
Key Aspects of a Rental Agreement
Although there are different types of rental agreements, and it is often on a case to case basis, there are a few key aspects of a good rental agreement. The first one is that the agreement should identify the landlord and the tenant and the correct information about them. Secondly, the contract should state what the agreement is about, and to identify the specific details about the property, its location, dimension and what is included inside the property. Then it should also state the period covered for the said rental agreement, when it starts and its end and if both parties agree, it should also state whether the contract is renewed automatically or not and the provisions in which it is considered as renewed. Then of course, the contract should identify the amount of the rental fee and how it is to be paid, on a month to month basis, in full for the duration of the rent or in a staggered basis. Finally, the agreement should include the limitations of the agreement, the conditions in which it will be violated and the actions to be taken when either the tenant or the landlord do not hold up to their contract.
Rent to Own Agreement
Most landlords see their rental properties as a sure way to make money without having to invest so much time and effort on it. In fact, real estate is one of the best ways to become financially secure, and it is the only business that keeps on increasing in value. A property you may have bought in the past for a few thousand dollars could be worth millions in the future. But as any business, housing and real property can also take a blow from the economic and financial crisis we have seen just in recent years like the housing bubble. Moreover, overtime it becomes expensive to keep on paying real estate property taxes and other dues that the state requires. Old property has to become compliant with new building rules and regulations and this would mean a large investment for the landlord. So to get around this predicament, especially for those aging landlords who do not have a family to leave their properties too would prefer a rent to own agreement. Rent to own simply means that the tenant pays rent for a number of years until the valued amount of the property is paid off, and then the ownership of the property is transferred to the tenant. Agreements like this are actually very rare, and if you happened to come across one, then take the opportunity, by the end of the contract, you get to own what you have been renting out.
An Easy Rental Agreement
With the advent of technology, even making a rental agreement can be done online at the ease of your fingertips. Look for a firm that specializes in rental agreements across different states and someone who can work with digital forms and e-signatures so you can have hassle free transactions with your tenant and be able to weed out those whom you would not want to be your tenants.