Tailoring A Standard Lease To Your Benefit

June 18, 2012 By Leave a Comment

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…)

Maintenance

Who takes care of each individual maintenance item?  Who pays for each of these items: heat, electricity, yard maintenance, garbage removal, small repairs under $50, phone, cable and internet access?

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?

Rent acceleration

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.

Security deposits

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.

Protect yourself

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

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Selling Your Investment Property With Tenants In Place

June 11, 2012 By Leave a Comment

Oh, those pesky tenants…

If you’ve decided it’s time to sell your rental property that is underperforming, or if the investment property is scheduled to be sold at a particular interval, and you have tenants already in place, what is the best way to market the property? The soundest investment property advice is that tenants certainly have rights, and you must abide by them. However, planning for the sale is key.

One of the things you should do when taking on any new tenant is to make sure that your rental agreement states exactly how you will have access to their unit when you put the property up for sale. An intransigent tenant can be a major stumbling block to realizing the proper market price on the sale of your property.

Always stay on good terms with tenants

That is why it is important to maintain good relationships with your tenants over the entire term of their lease. Of course, if you have a property management company, they should be maintaining a proper relationship with each tenant as well.

When it comes time to bring your investment property to market, you’ll need to notify each tenant of your intention to sell the property. You’ll also need to give them advance notice well ahead of placing your property up for sale. If they are on a long-term lease, new prospects looking at your house will need access into their unit not just to see the condition of the property, but also to evaluate what kind of tenants they will be inheriting from you.

Avoiding devaluation of your property

A poorly kept unit with a particularly bad tenant can easily blow a sale. For this reason you or your managing agent will need to check out the unit before you put the property on the market. If there are any problems with the unit (for example, if it looks disheveled or needs repairs) then this must be addressed immediately prior to putting your investment property on the market for sale.

Another bit of sound investment property advice: it’s always a good idea to keep your tenants happy. And if you had a problem with one or more tenants prior to putting your house on the market, you might want to consider a token “gift” so that they can help you sell your property. As an example, this might include a gift card to a local dinner establishment. It should not be in the form of a rebate on their rent however.

When your property is being shown…

If real estate agents are going to be showing the house, tenants must be advised ahead of time of all potential showings. You’ll need to set up a system for the listing agency to contact the tenant and obtain their permission to come in to show their unit. At all times real estate agents have to respect the rights of tenants when going to show prospective buyers your property.

It is also important for the listing agent to take pictures of your property with each tenants’ permission for photos inside a tenant’s particular unit. The listing agent should also be giving tenants notice well in advance of any open house they may want to have on the property. (These may consist of broker open houses for the wholesale trade and/or retail open houses – that is, open houses to the general public.)

No perfect way

As an owner of an investment property being readied for sale, it is also important that you understand there is no perfect way in which to sell your investment property with tenants already living there. It will be completely out of your control what the exact condition of each unit will look like when prospective buyers show up at the door.

You also will not have control over sounds or smells emanating from each unit when the property is shown. For this particular reason, it is always a good idea to try to have showings of your property in the morning or early afternoon only, staying away from dinnertime. Smells emanating from tenant’s kitchens at dinnertime can vary tremendously, and some prospective buyers can find it off-putting. And if those buyers intend to make an offer on your investment property, this could devalue their offer.

Make nice with your tenants

The most important investment property advice for a rental property owner when selling their investment property, is that they only have so much control over the presentation of their property when tenants are living there. The best thing that an investor can do prior to marketing their property, is to make “friends” with each tenant in their building. In this way, your tenants can ultimately help you when it comes time to sell your property.

 

photos courtesy of  nicerenter.org, realestatedubaiblog.com, trexglobal.com, howtogetridofstuff.com, mcclurepropertymgmt.com, lets4u.net, tenantchecker.com

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Holding For The Long Run

April 4, 2012 By Leave a Comment

A new type of business model

Much attention has been paid in the news recently to a new wave of companies that have been more than just dabbling in rentals, as they try to corner the market when they buy investment properties. These companies have been actively creating an assembly line of purchasing foreclosed properties, fixing them up and then putting them on the market as strictly rentals. These firms then seek tenants for all their recently bought properties.

Some of these companies are based in the hardest hit real estate areas of the country over the past few years, most notably California and Florida. They utilize seed money from large investor firms that bankroll them with multimillion dollars in funding. Thus, these firms do not have to rely on traditional mortgage financing for all their acquisitions.

Fine tuning how they buy investment properties

Apparently these companies have fine tuned the buying process to such a keen degree that they use a veritable minion of inspectors to go evaluate up to 20 homes a day. The firms then decide, based on the raw data the inspectors provide, whether to make actual bids on a property. These inspectors will spend approximately 15 to 20 minutes in each house, then plug into their iPads the data about the condition of each house. Proprietary software, created by each specific firm, then interprets the data based upon revenue parameters that each company is expecting.

Items such as the condition of the kitchen, appliances, floors, roofing and landscaping are all covered, to name just a few pieces of raw data collected. Then, a highly sophisticated algorithm contained in the software is used to determine what repair costs would be required to bring the property up to snuff for renting out in each particular area.

Coming up with a bid price when they buy investment properties

Once those costs are figured out, a number is produced representing the total repair cost along with what the house should be worth in today’s market in it’s current condition. The combined total yields an estimated price range the company will offer as their bid on the house. And this is done hundreds of times a day, as each firm makes bids all over their respective states. So mom-and-pop investors are not only competing against themselves now, but they’re also competing against these large companies that deal in such large amounts of distressed and foreclosed properties.

But let’s consider one thing that the mom-and-pop operator has over these large assembly line style operations. These large companies have only been in existence for a very short time, and even though they are creating a huge market for the purchase of distressed properties, they have yet to show a long-range track record for actually doing the hard work – that is, holding onto properties for the long run.

The holding process

This is where the truly difficult part of being a rental property owner comes in. As I have advocated in previous articles here, you really want to stay local when you’re managing your own properties. Large-scale companies that are buying in many disparate areas and municipalities have a tough road ahead of them. Finding good tenants, dealing with delinquent tenants, emergency repairs – these are all difficult things to manage, even with a professional property manager in place.

Different municipalities each have their own set of unique tenant/landlord laws. The company that’s doing this type of assembly line purchasing of properties will also have to be able to deal with these different municipalities and their local laws. The amount of time, energy and most probably, attorney power will be staggering for companies like this.

Figuring in for delinquencies

Imagine a situation where you have a 5% delinquency rate on all your properties. But as a mom-and-pop operator your properties are in one or two local municipalities. And you know you’re going to have to use an attorney to evict anyone that does not willingly want to leave. Now imagine doing that in a large-scale way. Try 5% on several thousand properties in many different locales. Attorney costs alone will be staggering for a company like this. I’m not sure how investment companies are putting money up for companies like this to exist, but they’ll soon find out that the purchasing of the properties was the easy part. In a few years, holding onto these houses will prove to be very difficult.

When it comes time to sell investment properties

In addition, when it comes time to sell off some of these properties, as I’ve already mentioned in a prior article about jettisoning your worst performing properties, there’s going to be a major hurdle in front of them. Even in a few years, there will still be a huge glut on the market of distressed properties and other rental houses, and these large companies may not be able to even get back what they paid for the properties if they sell them too soon.  I’m also not a big believer in cookie-cutter approaches to fixing up houses for rent. I believe when you purchase a property to rent and to hold long-term, you’re going to be putting your own personal stamp on it. So while you are making basic repairs and fixing up properties in a very simple way, you’re still doing it in your own style. Not so with a large company that’s doing hundreds, if not thousands, of properties.

Assembly line as a way to buy investment property – a bad idea

So only time will tell how long these assembly line investment property companies will exist, but I think they are in for a very difficult awakening process in the next few years. As they try to find good, qualified tenants, hold onto these tenants and manage the properties in each of these different locales, they’re going to encounter a whole host of headaches. They’ll find out, painfully, what mom and pop investors already know – that holding rental property for the long run is really hard work. And that purchasing property, while time consuming and difficult as well, pales in comparison to the workload ahead of them after the purchase.

 

photos courtesy of chambanamoms.com, nanowerk.com, homeinspectors.com,  appraiserjobs.com,  tenantscreeningblog.com,

 tenantverificationscreening.com, forsalefortcollins.com,

 bestlongislandhomeinspectors.com

 

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Commercial Investment Opportunities – Part 3

June 18, 2011 By Leave a Comment

Commercial property types – retail stores

Retail store operations are another form of commercial property investing. Stores can be found as part of small strip malls, neighborhood shopping centers, community shopping centers and regional shopping centers (for example, indoor malls).

Strip malls

Strip malls, those sets of small store buildings that tend to line both sides of busy commercial streets in every town around the country, make for a great entry opportunity for the small investor. Small two or three store buildings may actually be less expensive than purchasing a residential duplex or triplex house. And because tenants usually are placed on longer term leases, turnover and vacancy rates are traditionally lower as well. This makes managing the property easier too. Most strip store leases run three to five years, and usually include renewal options.

One key element to remember about strip malls though, is that building profitability is directly related to the profitability of the tenant businesses. If a tenant is not doing well, regardless of having a lease, they may be forced to close down – and you’ll need to find a new tenant. But if their business is a success, they’ll want to stay for longer periods, and rental increases are more easily accepted. The landlord will want to help the tenant’s business out as much as possible due this symbiotic relationship. Many leases are graduated leases, which start with a low rent in some initial period, then gradually increases as the tenant’s business increases.

Small shopping centers

Small shopping centers are situated close to residential neighborhoods for easy driving access to basic goods and services. Usually there is an anchor store of a supermarket, with many personal services stores surrounding it (like dry cleaning, laundry, barber shop or pharmacy). These centers also have plenty of available off-street parking associated with them. Leases for business in these centers usually will include a minimum rent plus some form of override – a small percentage of their gross sales will be added to (or drawn against) their base rent.

Community shopping centers

These types of retail centers are usually characterized by a much broader range of goods and services being offered, to a larger geographic area. Here, anchoring tenants include major department stores in addition to a supermarket. Movie theaters, large appliance dealers and furniture stores are just some of the fixtures that comprise tenants in these centers. In many instances, these groups of stores will be aligned as an outdoor mall. And due to the larger size of the centers, many competing business may be found there.

The greater the size of the center also requires the use of a professional management company to run the entire property. Lease terms for larger tenants may run 15 to 20 years, while smaller tenants may have lease terms that run between 5 to 10 years. Leases are traditionally of the “percentage lease” variety, with base rent being augmented by a percentage of gross sales, with annual adjustments.

Regional shopping centers

Regional shopping centers are comprised of large outdoor or indoor malls, that service areas from 15 to 20 miles away. Like in a community shopping center, businesses tend to be grouped together around several key anchor department stores. A full-time manager is required on-site at all hours of operation, but full-time maintenance crew and security personnel are also required costs for the center owner(s).

 

photos courtesy of  warrentemplesmith.com, interstateauction.com, wesparkle.co.uk

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Commercial Investment Opportunities – Part 2

June 18, 2011 By Leave a Comment

Commercial property type – residential apartment rentals

This category of commercial property includes multifamily houses of 5 families and above, as well as small, medium and large apartment buildings. Like residential rentals, many of the same basic concepts for acquiring and managing these types of buildings can be applied. However, the larger the apartment building, the greater the economies of scale, and the potential for much greater profit exists. However, most of the risk inherent in this type of investment lies in vacancy rates. The larger the number of units in a building, the greater the responsibility of keeping them fully occupied at any given point in time. This represents the greatest challenge in managing these kinds of properties.

Commercial property type – Office buildings

There are many forms of office buildings The most common types consist of small offices, low-rise buildings, high-rise buildings and office parks. Tenants typically are non-retail business operations that do not require street frontage.

Determining value

When evaluating the profitability of any commercial space, you will need to determine what the realistic market rent for the space should be. If it currently is too little, then the building’s profit potential is being minimized. And where rents charged are too high, you’ll have many vacancies – producing a potential cash flow shortage.

Market rent has to take into account the overall economic landscape, the quality and location of the building and the services the property provides (for example, parking, air conditioning, utilities, floor coverings). Rents are usually established as a specific dollar amount per square foot of usable space.

Lease agreements

In general, standard leases are used when renting out commercial space. However, there are special conditions that can be added to the lease to tailor them for any specific renter. An example of these type of conditions is an escalation clause. With this provision in a lease, rent can be adjusted upwards each year at a set rate. This helps the building owner offset increasing building expenses.

Many leases allow for special types of services to be provided, like a janitor or maintenance service, receptionist or storage facilities use. Another special condition that’s sometimes allowed by building owners, is for the ability of any tenant to sublet their space should the tenant need to move. This a kind of escape clause, and traditionally requires the landlord’s approval of the subletting company.

Usually when entire buildings are being rented out, triple net leases are used. This type of lease calls for the tenant to pay for all utilities, taxes and insurance on the building during the term of the lease.

    photos courtesy of  en.wikipedia.org, golorica.com, 123rf.com

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Commercial Investment Opportunities – Part 1

June 18, 2011 By Leave a Comment

Some basics of commercial property investments

 

Buying commercial property

Most property investors will tend to stick with investing in types of properties they know best, and feel most comfortable managing – usually residential real estate. But for those who are looking for greater profits at a quicker pace, then commercial property should be considered as well.  Most investors will not be as well versed or comfortable with commercial property, so there is definitely more specialization required when investing in it. In addition, the absolute dollar amounts required (as well as financed) tend to be much greater than with residential property investing. With more risk comes more potential for return.

Unlike houses, commercial properties almost uniformly derive their value from rental income, not so much from general market appreciation. The greater the rental income, the greater the value of the commercial property. If you can purchase a building where rents are low, then manage to increase the rent-roll on the property, you can increase the overall value of the building. In addition, the quality of the leases you have with tenants in a commercial property will help determine its value. Poor tenants (read: poor paying) with very short leases will yield a less valuable property compared with a building that’s locked up with very strong tenants on long-term leases, with rent escalation clauses built into those leases.

Types of commercial investments

Commercial property investment runs the gamut from small apartment buildings to large-scale ones, small office buildings to large high rises, as well as office parks, shopping centers, strip malls, and many types of industrial buildings, including warehouses, manufacturing buildings and industrial parks.

With each successive commercial property type, the level of sophistication and specialization for that particular form is required. In may ways, relative to residential property investments, commercial properties require much less estimating and speculation, and therefore risk is actually lessened because as is the norm, actual income statements can be analyzed from existing, performing properties. That’s not usually the case with residential rentals, where the investor needs to make guesstimates as to market rents for vacant units, as well as for many expense items, such as fuel and electrical consumption. With commercial, past performance of a building will dictate it’s market value.

In addition, the high cost of most commercial property will be out of financial reach for an individual investor. However, investors can pool their financial resources (and credit lines) to form investing groups. Also, investing is Real Estate Investment Trusts (REIT’s) is also very popular. These are usually publicly traded funds that, like any stock-type of investment, you’d be simply investing in without having a say in the management of their respective property portfolios.

    photos courtesy of  ellara-marble.com, rojasrealtygroup.com, phaorient.com

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Residential Investment Opportunities

June 18, 2011 By Leave a Comment

Types of residential real estate investments – an overview

When we refer to residential investment property, the two main types are single family and multifamily houses. Land for development purposes is also another form of real estate investment, as are condominiums and cooperatives.

Single family houses

Single family properties are the most widely used investment types for property investors. They are traditionally the easiest to obtain and to finance, making them the preferred entry point for investing amongst first time real estate investors…

Multifamily houses

Multifamily houses are another attractive investment opportunity for beginner investors. They offer the investor the option of either renting all the units in a building out, or making one of the units in the property their own home, while at the same time renting the other units out and managing the entire property. The obvious advantage to this latter scenario, is that as on on-site landlord, you won’t have very far to travel when a tenant’s unit requires repairs, or when they have emergencies. There are also many tax benefits from being the landlord of your own building.

There are several types of multifamily properties you can invest in. The simplest ones are the two family or the three-family. Some two family properties are duplexes, which are side-by side homes, separated by one common wall. Likewise, a triplex is comprised of three side by side houses, each with a common adjoining wall. In addition, two or three family houses can look like a single family house, but be comprised of units on top of one another.

Four-family homes are usually comprised of four units on several levels – some are vertically grouped, with one unit in the basement, and the others on separate succeeding floors. Others have a couple of units on each floor. However, four-family houses represent the largest multifamily houses that can be financed utilizing residential mortgages. From five-family and above buildings, properties are considered commercial.

Land

Land purchases and development are not usually in the scope of beginner property investors. Most residential land purchases are done by experienced developers who have the deep pockets necessary to accept the increased risks of this type of investment. Purchasing tracts of land, whether small or large, requires a great deal of market research into the areas in question. Since mortgages are not traditionally given by lenders on land alone, developers require a great deal of cash on hand to finance the initial land purchase, prior to actually beginning the development of the property.

Condominiums

Condominiums (condos) can be created for any type of real estate – not strictly apartment buildings. Condos traditionally create a legal structure whereby some of the land of the condo complex is owned in common, but each individual unit (and the land under it) can be bought and sold under separate title.  So each unit has it‘s own separate tax assessment.

In addition, bylaws are created for the entire condo complex. These bylaws, among other things, define the exact common areas of the complex (for example, a pool area, clubhouse, parking spots, tennis courts, etc.)

These bylaws also allow for the creation of an association of the owners to manage the entire complex. Each condo unit owner is allowed one vote in the association, and elects a board of directors to take on the duties of managing the complex. This board also sets the budget for the entire complex, including the amounts each unit will have to pay for property taxes, insurance premiums and costs for maintaining all the common areas.

Cooperatives

Most cooperatives (co-ops) are actually private corporations. The corporation owns the land and building with all of it’s apartments on it.  The corporation also provides for the election of a board of directors (the co-op board) made up of some of the apartment owner/shareholders. The officers on the board take on the responsibility of managing the entire cooperative. Stock in the corporation is issued and sold to apartment buyers in quantities that are proportionate to the value of the apartments available for sale. In effect, buyers are purchasing a proprietary lease within their own company. These tenants are then required to follow the rules and regulations that were created in the corporate charter.

Co-ops can set their rules for buy-ins to the corporation. As an example, a co-op can require only all-cash purchases of it’s units/stock, so that it can attract strictly high-end buyers. But it also can control it’s own economic and social environment as well in so doing.

photos courtesy of  3dluxe.co.uk, philcebuproperties.com, newpointeestates.com

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Buying Your First Rental Property – Part 6

June 17, 2011 By Leave a Comment

Security deposits

When a lease ends, and a tenant is not going to continue with a new lease, and has given you proper notice of his leaving (usually 60 days when a lease is involved), you’ll have up to 30 days after they’ve moved out in which to return their security deposit. You are allowed to deduct money from this security deposit for any repairs you will need to make to their unit, provided these repairs are not associated with normal wear and tear.  If they damaged a washer/dryer, or didn’t report a bathtub leak and it produced damage to the flooring – you can deduct for items like these. But if they did tell you about that leak in a timely manner, and you did nothing about it, then you can’t deduct for any damages associated with the leak.

Vacancy rates

Vacancy is one of those expenses you must plan on when working on your pro forma income statement for any property you’re considering making an offer on. It’s best to allow conservatively for a one month vacancy per year for each unit in the building (about an 8% rate). If you want to be more conservative, say 10%. In a very slow market, you may need to bump that figure up even more….

Other features to look for in your rental property search

There are a number of other features that will affect the value of any rental property. It’s always best if you can locate properties that have separate meters for electric service for each unit. Also, and even better, is if the property has separate heating systems for each unit. It’s always best if the tenant can pay exactly what they use in terms of heat, hot water and electricity, rather than when a property only has one heating plant, for example, and you charge them an increased rent based on the estimated heating cost from their unit.

In addition, it’s always better when a property has it’s own on-site parking area than not. Tenants value discreet parking spaces for themselves and their family very highly.

Who pays for snow removal, shoveling sidewalks and walkways?

You’ll also want to figure out what the common areas of any property are, and how you’ll be maintaining them. Will you do it yourself? Will you hire a manager? Or possibly a contractor/superintendent? Many landlords will designate a tenant they trust to perform these services in return for a break in rent.

photos courtesy of  thehappiercompany.com, keysinvestorsalert.com, stamfordadvocate.com

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Buying Your First Rental Property – Part 5

June 17, 2011 By Leave a Comment

Getting market rent

As was mentioned earlier, you’ll want to do your research as to what constitutes market rent for your specific area at any given time. Once you’ve determined what you want to ask for rent, you’ll need to start the search for your tenants.

Using a Realtor

You can use a local Realtor to list your rental.  Most areas have realty agencies that tend to specialize in rentals versus sales work. While this is one of the easiest ways of finding a tenant, it can also be great for screening the best tenants. Realtors will routinely run credit checks for you, and can even pre-screen potential tenants for you by checking on their references. However, you can expect to pay them a full month’s rent for their services (which the listing realty office will usually split evenly with the realty office that brings the new tenant).  If you have relatively low turnover, this method for finding tenants can be excellent. However, if you have a tenant population that’s turning over every year, this can be a rather costly way of doing business.

Other ways to find tenants

Of course, you can also try to find tenants on your own. You can place “for rent” flyers in local supermarkets, laundromats, libraries, coffee shops, post offices – basically any location that might have a bulletin board available for prospective tenants to see.

You can also place ads in your local Pennysaver publication. Not only will they have a printed version, but they’ll usually have an on-line version of the ad as well. You can also place on-line ads on your local Craigslist, Hotpads.com, or other rental sites. Ad costs are minimal for these forms of advertising for tenants – but you’ll have to field all the calls, sets up all the showing appointments, and follow-up with each prospective tenant as well. You’ll also have to ultimately screen them yourself by asking for their credit and references, and check them out on your own.

Security deposits

Once you’ve chosen a tenant, make sure you’re clear as to the security deposit you’re looking for. Usually landlords will ask for 1 month’s security deposit. But if you’re feeling particularly skittish, you can ask for 1 ½ or 2 months security. But keep in mind that most potential tenants will be turned off by your extra need for “insurance,” and they may be unable to afford the extra month’s security, and you will be limiting the pool of available tenants by doing so. Don’t think that just because a tenant can afford that extra month of security, he’ll automatically make for a better tenant.

Negotiating rent

Also keep in mind that though you’re asking a particular amount for rent, a potential tenant has the right to make you an “offer” for a lower amount. That’s perfectly acceptable. You simply need to decide what the market conditions are like, and if it’s worth it to negotiate or not off your asking rent. In a slow market, obviously it will be. And in a hot market it won’t.

The lease

In addition, once you’ve chosen your new tenant, you’ll want to agree on the term of the lease. Most leases tend to be one year in length. Some can be two years. And some rentals are simply “month to month,” meaning there is no set time for a tenant to stay – and you will be required to give them their security deposit back with only a month’s notice.

Make sure you have a standard lease all ready to be signed once you’ve selected your tenant. There are standardized leases you can purchase at office stores, or on-line. If there is any item that’s specific to your rental, you can type up a separate “rider” page for these items (for example, that the tenant will be responsible for shoveling his own private walkway and steps in the winter).

photos courtesy of  dimensionshomepage.com, rentalcerts.co.uk, quincyma.gov 

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