Want a profitable rental property, as a landlord?
You can (and should) take all the standard steps to protect your investment from bad tenants. After collecting rental application forms, you run tenant screening reports, check the tenant’s previous rental records, credit scores, and references. You collect a security deposit to cover unintentional damages, and you interview the applicants carefully.
Is that enough to safely sign a lease contract?
In the world we live in today, perhaps not. Heard the cautionary tales of professional tenants that go from home to home, destroying property, not paying their rent? They wreak havoc with the neighbors and completely ignore your lease contract rules.
How did they get around your investigation? They use the Internet to create false documents. They provide names and phone numbers of friends to mislead you into thinking they rented property from them and were perfect tenants. Often the information they give you information to run the credit checks in a relatives name, with their Social Security Number. Professional tenants? These people are professional squatters.
Nor is it easy to get them to move. The law covers them and you must go through the entire eviction process that takes more time and more money.
And while you can buy insurance that will pay you the rent if your tenants defaults, that doesn’t mean you don’t need a protective lease agreement. The time to protect your rental property and enforce your lease contract rules is before giving tenants possession of your property.
Here are eight ways to structure your lease contract and leasing rules, to protect your rental property from damage, and to protect your wallet from rent defaults.
Pre-Lease Contract: Property Tenant Proofing
How tenant-proof is your rental property?
Can it stand up to spills and leaks? Can the walls be wiped clean easily, or will every passing brush against the walls leave a smudge?
Skip the carpet in as many areas as possible. It is guaranteed to get dirty, stained, or ruined. Go with luxury vinyl tile, laminate, or bamboo as tougher, in many cases waterproof alternatives.
Check out our complete list of tenant-proofing tips, to physically protect your rental property as much as possible, before layering on the legal protections.
Pre-Lease Contract: Aggressive Tenant Screening
No one became a landlord because they wanted a second job. The last thing you want to do is chase down your tenants for rent payments every month. You need to step up your tenant screening policies if you want to ensure you lease to nothing but the best, most profitable tenants.
Thorough tenant screening will ensure you are leasing to creditable people, and send scam artist on their way.
- Require a copy of their government-issued photo ID.
- Take out your cell phone and tell them you need a photograph to go with your background check request. This will let them know that you will make sure they are who they say they are.
- Require paycheck stubs for the past two months, and talk to both the tenant’s direct supervisor and HR department.
- Ask for contact information and physical addresses of where they have lived for the past two years.
- Advise tenants that your rental agreement requires a complete and detailed background check before you can show them the property.
Never bend the rules. No matter how nice someone seems or how tough their situation is.
At Lease Contract Signing: Document the Property’s Move-In Condition
The time to start exercising your landlord rights is before you even sign a rental contract. You need to make it clear that the tenant will be held directly accountable for any changes in the rental unit’s condition, during their tenancy. Inspect the rental property with the tenant, and complete a move-in/move-out property condition report with the tenant.
The leasing agent and the renters will do a detailed walk-through of the house and property before the party takes possession of the house. When the lease has expired, this walk-through will be repeated. Any issues that are beyond normal wear and tear will be repaired at the expense of the owners. Our contractors will do the repairs (so we are assured quality work) and the costs are deducted from your deposit and via direct withdrawal if the cost exceeds the deposit amount.
Take photos (and perhaps videos) of the inside and outside of the home to keep with your report. Every room, every wall, every floor. Turn on the timestamp feature on your camera.
The inspection should include the:
- Walls and paint condition
- Gutter system
- Heating and air condition system
- Smoke alarms
- Appliances (if provided)
- Windows for air leaks and cracks
- Check security lights on the outside of the home
- Carpet and flooring
- Wall protectors behind every door
- Chimney if the home has a fireplace
- Stairs and banisters
- Ceiling fans and lights
- Testing all property surveillance equipment
- Status of any pests
Free Mini-Course: Passive Income from Small Multifamily Properties
Lease Clauses: Protect the Property Physically
Physical property updates can help tenant-proof the property, but the lease contract itself can be used as a legal shield to protect your property as well.
Consider including the following lease clauses in your legal contract:
- Prohibit smoking inside the rental unit with a no-smoking lease addendum.
- All occupants and their guests must remove their shoes before entering the house. This is for the protection of the carpets and floors.
- Renters must put felt pads on all furniture feet and will be responsible for floor repairs if the floors are scratched due to not having the pads on them.
- Televisions must be placed on stands and not mounted to the walls. Mounting televisions leaves holes in the drywall or sheet rock. Improperly mounted televisions come crashing to the floor taking a large piece of drywall with it.
- Only vehicles that are operational and used by the renters are allowed on the property. (No oversized vehicles are allowed without prior consent.)
- Storage buildings, outdoor playgrounds, and pools cannot be placed on the property without prior permission.
Lease Contract: Outline Maintenance Responsibilities
Who is responsible for what ongoing maintenance?
Some maintenance can be delegated to the tenants. Consider making the renter responsible for the following ongoing maintenance tasks:
- HVAC filters changed every three months
- Smoke alarms and carbon monoxide batteries checked every three months
- Semi-monthly cutting of the grass when in season. (Side note: specify that renters cannot change the landscape without prior permission from the landlord!)
- Gutters cleaned every three months
- The home must be kept clean and is subject to inspection. This includes appliances and all property included in the lease contract.
Key Lease Addendum
Be sure to have a document that records every key you give the tenants. For example, they could have two keys to the front and back door, a key to a storage room or shed, a key to the mailbox, and a key to the garage. Have them sign that they received all of these keys.
The document should list how much you will charge for a key replacement, Some landlords charge from $5 to $15 per key to have it replaced. Make a note: If the reason they no longer have their keys is a security risk and you must have certain locks changed, the fee for the lock change will be charged directly to the tenants.
More Rental Contract Clauses to Protect You as a Landlord
It’s not just physical property protections and maintenance requirements that landlords need to include in their rental contracts. Tenants also need to follow certain behavior rules, to make good neighbors, minimize your liability as a landlord, and to minimize wear and tear on the rental unit.
Make sure the rental agreement specifies the following stipulations:
- Renters are responsible to buy adequate renters insurance and to provide a copy to the landlord. If the insurance is allowed to lapse, the renters are in default of their lease.
- Renters must treat neighbors with respect and common courtesy. Loud music, disruptive parties, and not respecting the boundaries of the property is not permitted.
- If the renters own a dog, they must pay a pet deposit and an additional pet rental fee on the property. It is their responsibility to pay for repairs of any damage to the home or property due to the dog. The repairs will be handled by your contractors and the fees will be added to the payroll deduction. (Additional clause you can include: If the tenants have a dog, they must have the dog off the premises during rental property inspections.)
- While renters are allowed to have visitors and guest for a reasonable amount of time, no one who is not listed on the lease will be allowed to stay in the home for more than five nights in a calendar month.
- Under no circumstances are the renters allowed to sublet the property. (Note: some states and municipalities don’t allow this clause; make sure you check your state landlord-tenant laws before including this clause in your lease agreement.)
- Leasers are not permitted to rent any of the rooms in the house to another person.
- If you leased a home from us and your name is the only one on the lease, your significant other cannot live with you. They will have to go through the process to be added to the lease.
Lease Contract Clauses to Minimize Vacancies
Most Americans move in the late spring and summer months. That means it’s much easier to fill vacancies during those months, if you have a turnover.
Consider making all lease agreement terms terminate and come up for renewal or expiration on the last day of April, May, or June. It does not matter when you signed the original lease contract.
In most cases the leases are renewed, due to the quality of the people you select from your thorough tenant screening process (right?). However, if there is a problem, you can non-renew the lease agreement at that time.
That gives you time to repair the rental unit, perform any property upgrades, and re-rent the unit quickly with plenty of fresh rental applications to choose from.
Written Firearm Policy
The constitution of the United States gives you the right to own guns. However, leasing property is your business. As with any business, we have the right to refuse to allow people to bring firearms (legal or otherwise) onto your property.
As the landlord of the residence, there will be times when we may have to enter the residence. We will make every effort to notify the tenants if we are entering the residence, but if there is an emergency, or if they were notified in advance of an inspection, we will enter the premises. We do not want to fear a homeowner in the bedroom with a shotgun assuming it is a break in.
The no firearms policy protects you or your employees, and people who live in or visit the home.
Bonus Tip: Insure Against Defaults
No matter how careful you are, you risk getting a bad tenant. Maybe they lost their job, caught the kitchen stove on fire and packed up and moved out in the night.
Fortunately, you can actually buy an insurance policy to cover rent defaults. If your tenant stops paying the rent, the insurance company pays it until you complete the eviction process. Check out Rent Rescue for an example.
You should also check with your property insurance company to see if you need additional insurance coverage while the rental unit is vacant. If they financed their get-away by stripping all the copper wiring out of the walls and the HVAC unit, you may have weeks of repair ahead of you. Make sure your insurance covers the times when there is no tenant living in the home. A home under repair is a magnet for thieves.
And as mentioned above, include a clause in your rental contract that tenants must obtain – and provide evidence of – a renters insurance policy.
While you may find our leasing policies a bit extreme, these things are done for everyone’s comfort and protection. This also helps us to cover our investment. Some renters resent the extra steps we take. But, those who understand the complexity of living in a well cared for home in a safe environment are willing to support our efforts.
The things that we do to keep our property up are the same steps a responsible homeowner would take to keep their own home up. A home should be functional, beautiful, and healthy. This is what we provide.
There are plenty of horror stories about renters leaving leasing companies with thousands of dollars worth of damages. The steps we take ensure a healthy return on our investment and the peace of mind in knowing, we have done everything in our power to protect our property.
How do you protect your rental properties and your landlord rights? Have any favorite lease contract clauses? Share them below!
About the Author:
Ashley Lipman is an award-winning writer who discovered her passion in providing creative solutions for building brands online. Since her first high school award in Creative Writing, she continues to deliver awesome content through companies such as Rentbelly.