Investment in a rental property is one of the smartest investments that you can make. We all want to have a passive source of income. Rental income does not require significant effort. The demand for rentals is high. If you are paying attention to the maintenance of the rental property, you can make a good amount of money.
However, there are some rules and regulations that you and your potential tenants must follow. Being a landlord you have some rights and responsibilities. Similarly, your potential tenants also have some rights and responsibilities. This is the reason why you must be aware of the common terms that must be included in a rental agreement. You can also get a free printable basic rental agreement online.
It is a legal contract signed by both the landlord and tenant. A rental agreement is very helpful in avoiding and reducing issues. It is an important document for both the tenant and landlord if they decide to go to court to address some issue. It should be a detailed contract and both parties should understand all the terms and conditions in the agreement. The following are the most common terms rent agreement must have.
Local laws often put a cap on the number of people who can live in a residential rental property. Therefore, you should speak to an attorney to set occupancy limits according to the local rental laws. There are different ways to determine the occupancy limit. Two renters per bedroom is an established standard. However, bedroom size, configuration and age of children are important factors you must consider to determine your occupancy limit.
Names of All Tenants and Premises Information
Free printable basic rental agreement includes the property’s address. The government should also have the names of all adult tenants who will live in the property. The landlord and each adult tenant sign the agreement to take responsibility to adhere to the terms and conditions of the agreement. The contract legally allows you to hold them responsible if tenants don’t pay the rent.
Length of Tenancy
Both the landlord and tenant need to specify dates of tenancy on the same page. If the tenancy does not start on the first day of the month, you can prorate the rent and shorten the month. The tenancy can be monthly, quarterly, half-yearly or annual. Once the tenancy expires, you can create a new agreement with new terms and conditions. Doing a proper tenant screening and signing a long-term contract is in your best interests if you can retain responsible tenants.
Include the rent you will charge. The rental agreement also mentions payment methods and a date for the payment. In case you don’t know how much you should charge, start with 1% of the market value of your rental property. However, the rent also depends on the location of the property and features and amenities you are offering. Get some information from the local rental market. Set a fair rent if you want to attract tenants.
Move-in Paperwork and House Rules
If you want your tenants to follow some specific rules, include those rules in the agreement. For example, you don’t want to disturb your neighbors with loud music. You can specify ‘quiet hours’ in the agreement. Describe the steps you will take in case your tenants violate these rules. Describe the proper procedure and paperwork involved in the tenancy.
Deposits and Fees
Getting security deposits is a common practice. The agreement should include details of security deposits and other fees. Security deposit is typically 50% of the monthly rent.
Repairs and Maintenance
It is the landlord’s responsibility to make the required repairs and replacements. Both the tenant and the landlord have maintenance responsibilities. Outline these responsibilities in the rental agreement.