Ensuring high returns from your property investment starts with how you draft your rental agreement. Here are key clauses you can’t afford to exclude.
Did you know 90% of the world’s millionaires invest in real estate? If you want to join this exclusive group, it’s time to focus on your property and its rental agreement.
It’s not enough to just buy properties. You also have to learn how to manage, rent them out, and resell them. Here are 4 clauses you should add to make your rental agreement more effective and more profitable.
1. Security Deposit
The first clause you should include in your agreement is a security deposit. This will help protect you and the property from any damages the renters incur.
Not sure how much money to require for the security deposit. A good rule of thumb is an amount equal to two months rent.
This money can go towards damages, missed rent, or fees incurred. Check out this sample rental security deposit agreement.
2. Mitigation Clause
Even the best landlords have to deal with poor renters sometimes. A mitigation clause helps put in a place a way to solve problems before they become too big.
Before you create your mitigation clause, you’ll want to check with your local laws on what is and isn’t allowed. Some states won’t allow a landlord to seize property if the rent is late. Others will.
Find out what is legal in your area and then create a plan on what you will do if a renter misses payments or breaks anything.
You can check out some examples of these clauses here.
3. Right to Entry
Without a right to entry clause, you may not be able to enter your own property to inspect it. It seems crazy to think that you could be prohibited from your own property but without this clause, it’s a possibility.
Not only does this protect you as the owner but it also protects the renters as well. In the clause, you could say that you will always give them 24 hours notice.
It’s an agreement that you’ll both be grateful to have.
4. Occupancy Clause
Lastly, be sure to include an occupancy clause. If you are renting out a one bedroom apartment, you might not want a family of eight living there.
The apartment will get worn down faster and will cost more to maintain. As the landlord, you have the ability to specify how many people are allowed to live in the property.
This is especially effective if you want to avoid having your tenants sublease out other areas of the apartment.
It will give you more control and keep the property in better condition.
Before you can begin drafting your contracts, you have to find a stellar investment property.
Check out some of the best options on the market at High Return Real Estate.
Create Your Best Rental Agreement
Few things are as satisfying as seeing that passive income come in. Before you know it, one rental property will turn into two and you’ll become the owner of many more.
Let us help you get started on this exciting journey. Contact us to learn more about our forms and templates. You’re going to do great!