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SpringBrookFarm
Veteran Contributor

House rental agreement

Ive seen that a few of you on here own rental homes. We recently bought a new house and are looking at renting out our new house. Just wondering what kind of things i need to put in the rental agreement? Any body have a sample rental agreement i might be able to use?

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6 Replies
Longcreekfarms
Senior Contributor

Re: House rental agreement

Being the landlord, you can word anything in you want... No pets, no kids, no smoking... Whatever.
I have one tenant that received 5 years free rent because the old log house he wanted was in horrible condition. He did all the work and supplied all materials as we stated in his lease agreement.
Just be sure to include conditions of whether or not you require a security deposit and also when the money is due. Monthly,quarterly, and the 1st Tuesday of the blue moon... You get the point.
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turkey feather
Senior Contributor

Re: House rental agreement

We just had our furnished rental totally destroyed, not one thing was salvageable. I checked out the people with two references but did not ask if they would take care of the property. I only asked if they could pay the rent. Make sure you are inside the house at least once a year. We have never rented anything and did not understand renters. A good lease will mean nothing if they are destroying the property and won't let you in. Beware of odors. Be sure to look inside their vehicle, if it is filled with trash do not rent to them. Four in one hundred people are socialpaths and have no conscience. This is our story, beware.

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Jim Meade / Iowa City
Senior Advisor

Re: House rental agreement

I started with a hand shake and ended with a four page document.  Good luck.

Here is one of many examples of a lease:  You can find may on the internet.  A good source can be your state law or bar association or your local land grant university.

http://www.dca.ga.gov/housing/specialneeds/programs/documents/C-2SampleLEASE.pdf

 

I had a friend in the apartment rental business and I got a copy of their lease and modified it.  I also used an application form modified from theirs.  I would absolutelyl go to some such successful business and ask if you could have a copy of their lease.

 

I had bad experiences with pets tearing up the house and yard, so was very explicit about how many and what kinds of pets to permit and where and how they were kept.  A dog on a leash will mean a resodding job, fore example.  I had an extra depostit for pets.

 

I had explicit language about how many people and who was permitted to live there, by name.  Anyone there for more than a very short visit (like  a couple of weeks) had to be on the lease.  You'll hear all sorts of "just visiting" and "lost my house" stories.

 

It is a good idea to do everything in writing.  After you have a verbal agreement on something, like repainting a room, follow it up in writing always.  The lease should say everything to be in writing.

 

I went over the lease paragrap by paragraph with the tenants.  For exmaple, it may say something about modifications.  Let's suppoe the tenant decidees to staple plastic sheeting over the windows to reduce the heat bill, and in doing so ruins the trim.  Was that covered?  Could they do that?  When you say no modifications without permission, do you mean they can't drive a nail in the wall to hang a picture?  You can see where this can go and each party will interpret any situation to suit themselves.  Each primary tenant signed the lease and all were responsible for it (in case one takes a powder).  

 

You may want to check and see if there are any tenants organizations and laws around.  In our college town, you'd think the tenant has more rights than the landlord, so knowing about this may be useful in how you define terms and follow up on problems.  Don't assume you can throw someone out on the street.  Smiley Happy

 

Don't be afraid to use a lawyer - yes, it costs money, but they should be up on how to do this and any problems that abound in your area.

 

 

 

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Kay/NC
Honored Advisor

Re: House rental agreement

We have accumulated four rental houses over the years, by different means. Our worst experiences have been with people we knew before renting to them...the closer, the worse they were. The more we did them favors, the more they took advantage.

After conducting a mass eviction in 2012, for just having heard one too many times how two of them had more rights than the Constitution, we had massive repairs to two properties, mostly due to pet damage. Before commencing with the costly repairs, I talked with a local realtor I know well and trust.

We decided to contract with her to manage three of the houses, which are here near our second home, on my husband's home place in Virginia. The fourth one we still rent to the tenant our younger daughter had in her first home, before she passed away. That one is in NC, as is our primary residence.


Honestly, I wish we had taken this route decades ago. The realtor at least doubled the tents we had been charging, which well justifies her 10% of the rent monthly. She does applications, which permits her to run credit checks. That weeds out a lot of the riffraff.

She fields the late-night repair calls. Even though our son does all but major plumbing and electrical repairs, she calls him directly. That keeps our aggravation factor down.

She has the correct sense of who can manage to live on a remote lane in the country, and who cannot. We have had a couple of frogs, but she knows how to file for judgments. In Virginia, they follow the person for twenty years, which means you usually get your money, eventually.

I will tell you not to rely on rents to pay your new house payment or other crucial bills. Think of it as investment income, which may not materialize in a constant positive stream. You will have some vacancies, and should an eviction be necessary, they can drag you out for a couple of months or more.

Budget for repairs...roofs and HVAC systems have to be replaced and repaired, so your tents have to allow for them. People think about paint and carpets, but you can DIY and use cheaper grades of supplies there...not so for a central air conditioner.

Give the tenant a $1 heating system filter each month when they bring you their rent. Worth its weight in gold.

Make sure lawn maintenance standards are included in the lease. Again, our professional agent does all of this for us.

NEVER carry a utility bill for a tenant. Our agent will not turn over keys for move-in, until the power is turned on in the tenant's name. If they cannot get an account, they cannot afford your home. Period.

Be in the mindset that it is better to wait for the right tenant, than to lease to the wrong one right now. We didn't really plan to become landlords, but it is actually giving us decent returns right now. We only spent about $150,000 all told, for these four properties, and they gross right about $3000 a month. Better than anything we can find to do with our money right now.

I could write a book on this subject. Hope this helps.
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SpringBrookFarm
Veteran Contributor

Re: House rental agreement

We are not realying on it to make any payments, biggest thing would be nice not to have to pay to heat it during the winter, the water, electricity and gas bills are almost as much as what we would get in rent for the place. We have considered selling it but over a number of years we could get more from renting it, as long as no huge problems arise, it doesnt have central air to worry about, and we just completly re did all the wiring and plumbing, new water heater, furnace was put in some time ago so that could be a concern going into the future, i hadn't thought about turning it over to a realtor, im actually thinking that would be a good idea instead of messing with it ourselves. Im not looking to get rich, but a few extra dollars a month sure wouldnt hurt. 

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Kay/NC
Honored Advisor

Re: House rental agreement

Not all realtors manage residential rentals. Ours handles roughly 135 properties, a portion of which are commercial ones like hair salons and small storefronts. Their extended family owns most of what they rent.

She posts properties on her website, but is very careful about not just posting " House for Rent" signs by the road. None of the houses here on Va are visible from the county road.

The online listing gets your property out in front of prospective tenants, but does not seem to lure the folks who rip out your HVAC coils in the night. I know they could follow the website listings, but apparently the metal thieves here aren't very tech-savvy.

A couple of notes to get you off on the right track. If you no longer occupy the home as its owner, you no longer qualify for homeowners' coverage. You need to work with your agent to secure the correct type of coverage for rental homes. Also, I carry a general liability umbrella policy, in case a tenant or their guest were to be injured, or their pet bites the UPS man.

I really do not like pets, but have permitted a couple in the house that has all hard floors. I would not permit certain breeds of dogs...your agent may advise you on that. Charging a significant pet deposit would be one way to recoup losses due to some wear and tear. I would make a pet deposit nonrefundable, or just have no pets.

Having a professional agent has taught me that the lease is limited to the persons listed on it. One tenant had a couple of his friends help him move in, and the agent overheard one of them saying he was moving here, too. She corrected that PDQ. Not on the lease.

If you don't know what you are doing, they will drag home extras, and that is a lot of wear and tear on the house. I had one girl ask me to sign a paper for the school district, basically lying to say that her cousin lived with her...I referred her to the agent, since the lease is between them...we are not parties to it. I knew what the agent would say...since such a signature is criminal fraud, theft of public services.

Once you know the insurance costs, add in the property taxes, and the realtor gives you a realistic rental value, you can figure out your net return. Right now, we have done a lot of pretty expensive repairs like one new roof, all new flooring and some structural work on the framing, and fresh paint everywhere. We felt nicer properties could command higher rents.

I actually asked our agent to come by and give me pointers on what was worth fixing, and what was not. She did that before we even signed the rental agreement.

A pro knows what sort of income qualifies a family for a given rent, too. I have had her say to me that a given prospect could afford one of our homes, but not the nicest one. She has income to rent ratios in her head.

Oh, learn to repair and make window screens. Rentals have to have them, but for some reason, renters beat the, all to hell! Easy to do with prefab parts from Lowe's, but we had to figure that out...must have built thirty of them last year alone.
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