We understand that it’s tempting to manage properties on your own. While it can quickly get overwhelming, for many people it’s easy enough to manage maintenance requests and other such tedious tasks associated with being a landlord. One thing we highly encourage you never to do alone is drafting leases. A poorly written lease can leave you empty handed in the end.
Here are 5 things that you should never have in a lease:
More than 5 days grace period
While most tenants pay rent on time, you do need to encourage this habit. Allowing too long of a grace period makes tenants feel relaxed about when rent is due. This relaxed feeling can quickly turn into tenants forgetting to pay rent on time which can destroy your cash flow.
Flexible late fees
If you’re collecting late fees you need to outline in detail what the fees are and you need to stick to it. Letting late fees slide creates a precedent of flexibility which encourages late rent. Remember, while most people intend to turn their rent in on time, being too flexible can cause people to forget damaging your cash flow.
Missing rules and regulations
You can’t enforce what isn’t in writing. If you have expectations of rules and regulations then they need to be in writing as a part of the lease or an addendum. Leases without rules and regulations leave you open to property damage and noise complaints that you won’t have grounds to enforce. It’s always best practice to over communicate expectations.
Asking tenants to do too much
As a property owner there are certain responsibilities you can require your tenant to keep up with, but by law, there is a limit to what they can be required to maintain. While it’s important to be clear about who maintains what, you need to keep this within reason. Requiring a tenant to replace carpet, plumb pipes or repair electrical is asking too much.
Outlining rent increases
It’s common for rent to increase annually as tenants renew their leases, but you don’t want to outline those up front. It’s impossible to predict changes in market trends. Keep your business flexible and send out rent increases notices within 60 days of the end of the lease so tenants have enough time to make a decision to stay or move.
If your lease needs some work, we’ve worked with legal professionals to create a top-of-the-line lease. Contact us today to see how we can help improve your investment business.