"Overview of a Standard Apartment Lease for Investment Properties"

The property rental agreement, or apartment lease, may be the most critical of all landlord forms. It's a legally binding contract that documents your landlord responsibilities as well as those of your tenants.

Just like you would not buy any multi family property without a property contract, you absolutely, positively must not rent to any tenant without first executing a "property rental contract" with that person.

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WHY YOU MUST HAVE LEASES

A landlord lease protects your interests, plain and simple. Specifically, it:

• Documents the due date, payment address, and the amount of the rent so you know how much property income you will be getting on a monthly basis.
• Eases your ability to evict or otherwise deal with a problem tenant
• Dictates rules and policies that your tenants must follow
• Clearly documents punitive measures for non-compliance (late fee, etc.)
• Provides contact info for both parties
• Documents the details of the landlord deposit so there are no misunderstandings later.

CONTENTS OF A LANDLORD LEASE

In general, any property rental contract will contain the following:

• Name, address and phone numbers for both parties
• Property address and type
• Term of the lease
• Rent amount, due date, and payment address
• Amount, date paid, landlord responsibility, and bank location for the security deposit
• Details on punitive fees (late fee, bounced check fee, etc.)
• "Additional Rent" clause, which allows you to charge tenants for excess damages, legal fees, etc.
• Utilities breakdown of who pays what
• Tenant responsibilities & rules (no subletting, no excessive damages, no disturbances of neighbors, no alterations, no pets in apartments, etc.)
• Renewal provisions
• Date and signatures of both parties

Also keep in mind that the lease is only one of the documents that you and your tenants will sign, date, and retain on lease execution day. The others are:

• Smoke detector addendum
• Move-in inspection checklist
• Lead-based paint disclosure (depends on your state)
• Receipt for 1st month's rent and security deposit payments

Again, you can access all of these forms for free here.

LANDLORD LEASE TIPS & TIDBITS

Finally, here is a list of "best practices" when executing any property rental agreement, in no particular order.

• Use 12-month leases, because this enhances tenant stability and encourages better behavior.
• When the initial 12-month lease expires, execute another 12-month lease instead of allowing it to go to a month-to-month scenario (same reasons as above).
• Document all the physical items you are including with the apartment (refrigerator, stove, window blinds, ceiling fan, etc.)
• Walk the tenant through the key provisions of the lease, and emphasize the key items (rent due date, no pet policy, etc.)
• You and the tenant should initial at the bottom of each page, as well as any sections that were hand-corrected / scratched out.
• Sign & initial 2 originals – one for you, one for your tenant
• Sign in blue ink if possible.
• Run your standard apartment lease / property rental agreement by a real estate attorney for input.

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