Many real estate agencies will hire management teams to handle their rental units. Real estate, in essence, is like any other business. Once you have the right infrastructure and procedures in place, you will have a well-oiled machine.
As a beginner landlord with less real estate, management teams might be out of your price range. Managing real estate on your own can be tough. But there are several steps you could take that cost less than hiring a management team.
When it comes to reducing your workload, most of the steps you can take on your lease are preventative. Instead of troubleshooting later, you can just avoid a disaster before it hits you.
Be Crystal Clear
Lease agreements shouldn’t be complicated. In fact, you should always aim to make your lease as simple as possible.
To make your job easier, make all your lease clauses as straight-to-the-point as possible. Don’t allow anything to be left to interpretation. A 12-year-old should be able to understand each of your clauses without having to ask for clarification.
If everything in your lease isn’t painfully obvious, your tenants may be able to squeeze through the information gaps. This is when the document that was supposed to protect both parties becomes a tool to attack you with.
Use simple terminology and clear text. Be especially clear when it comes to topics like:
- Consequences for late or non-payment
- What maintenance duties will be covered by you and what duties fall to the tenant
- What kinds of alterations are allowed
- Your right of entry procedure with the notice you will provide
- Early lease termination procedures and costs
- Rules regarding roommates and pets
- Code of conduct clauses (regarding excessive noise, illegal activities, etc.)
Remember that this is the step during which you troubleshoot most of the issues which may later come up during a dispute. So, you also need to make sure the lease clearly covers every relevant issue. If the property has access to a sidewalk, you need to cover how snow removal will be dealt with.
Leaving any issue in the air is as bad as leaving an issue up to interpretation. It’s an invitation for trouble.
Hire A Lawyer
Hiring a lawyer may not be the first thing that comes to mind if you’re trying to avoid costs. But it can end up saving you a lot of time and money.
Hiring a lawyer to help you draft your lease agreement has several benefits.
Every state has its own landlord-tenant laws you must adhere to. Those come in addition to the federal rental property laws you must follow.
The worst thing that could happen to a landlord is that they come up with the perfect, clearest lease in the world just to have it ruined by a law they didn’t know about. This is what your lawyer is there to help you avoid.
Even if your lease draft was clear enough, it won’t help if it violates a state or federal law. But if you don’t have extensive knowledge of those laws, a loosely-stated clause can easily be used against you by a tenant (or their lawyer) who is more legally knowledgeable.
Having a lawyer look over and finalize your lease agreement won’t cost a lot. But it will also help you avoid costly mistakes or omissions that will cost you a lot more in the future. They will help you troubleshoot all the potential problems that could occur and ensure your lease works for you.
Use A Template
If you already run multiple rental units, you should consider a lease template. It’s certainly more efficient than drafting multiple leases from scratch.
Lease agreements aren’t meant to cover every issue in every rental. But having a general template can help you make sure you cover all the most important things. Then, you can tweak or even rework sections of the lease agreement to keep them relevant to each rental unit.
Warnings: Some Things You Just Can’t Do
In theory, placing a greater burden on your tenants may sound justified and wise in some cases. But you have to be careful.
Even if your tenant understands and signs a lease agreement, there’s no guarantee they will abide by it. In many cases, placing more responsibilities on your tenants will backfire. If your tenants become embittered by feeling obliged to do things they feel their landlord should manage, they may just stop doing it. When this happens, you’ll find that by trying to avoid more work, you just end up with even more work.
Some landlords try to save time and money by getting their tenants to perform maintenance tasks. In many cases, you can put tenant responsibilities into your lease as a clause. This might work with many tenants, but not always.
A good middle ground between more tenant responsibility and a management team is hiring contractors who are paid for at least in part by the tenant. You can get tasks like snow shoveling and landscaping done by hiring professionals on a weekly or bi-monthly basis.
You can hire contractors to do many of the jobs you don’t want to. Outsourcing the tasks you or your tenant would be expected to take can make your landlord-tenant relationships much more stable.
What You Can Do Now
You can’t always avoid trouble as a landlord. But you can certainly take a few steps to make any troubles you experience easier to manage. The best way to do that is by putting some extra effort into your lease management.
Hi, I’m just an inspired recent real estate beginner investor named Miguel Rivera from a modest town neighborhood called Pigeon Hill in Aurora, Illinois, the City of Lights! I have 3 years in so far investing in real estate and excited to continue to walk my chosen path to reach my ultimate financial goal of living off my rental income before I reach 35 years old! Driven by infinite growth potential and guided by my mentor, I managed to get started and make it work with just a modest salary, practically no education in the field, learning and applying some key habits. This website is a collection of all things that I have learned so far that I wish can help other recent real estate investors! Click here to view more about my story.