As a landlord, it’s important to have clear policies written out in your rental agreement contract.
Many rental policies are regulated by state laws. With that being said, it’s your responsibility to know all the policies your lease should include and what provisions you should address.
In this article, we’ll be covering some of the best rental policies for landlords.
Security Deposits
A security deposit is a must for any rental contract because it offers protection against damage and unpaid rent. Before a tenant moves in, they should be required to pay a security deposit which will be returned as long as they don’t cause excessive damage to your property and have no outstanding fees.
In your lease agreement, you need to be clear about your policies regarding the security deposit. You should clearly state the security deposit amount, when it should be paid, and what circumstances warrant your keeping the deposit.
You don’t have free reign when it comes to security deposits. State laws dictate how much your security deposit can be, how much time you have to return it, and, in some states, what you must do with the security deposit (i.e., putting it in an interest-bearing account). Read up on your state’s legislation to make sure your policies are in accordance with the law.
Late Fees and Grace Periods
One of the most important policies in any rental agreement is your rent policy. You can’t run a successful rental business without consistent on-time payments. For this reason, it’s crucial that you have a late fee policy.
Usually, the threat of late rental fees is enough to incentivize tenants to pay on time. With that said, if a tenant does miss a payment, it’s important that you actually enforce the late fee. If you don’t, your tenant will see that they can break your policies without repercussions, and they may start taking advantage of you.
When you have late fees, you must also have a grace period. Grace periods exist to give your tenants a buffer period during which they can pay rent without being penalized. This is helpful to tenants who don’t get paid until the first of the month or when funds take a couple days to transfer.
Again, states have laws regulating the maximum amount for late fees or the minimum length of grace periods, so be sure to do your research.
Pets
Pets pose an added risk to rental properties. The damage they can bring to your property from scratching and chewing makes them unappealing to most landlords. With that said, the vast majority of renters these days have pets, so a no-pet policy will hurt you when you’re looking for renters.
Not only does allowing pets greatly increase your pool of renters, but it can also be lucrative if you charge pet fees or pet rent. Pet fees, pet rent, and pet deposits are great ways to combat the potential damages that pets might cause. Oftentimes, they simply bring you more revenue. With that, here are the three options you have for your rental pet policy:
- Pet fees are one-time fees that tenants pay when they bring a pet into the unit. They’re nonrefundable, and they’re generally between $50 and $500.
- Pet deposits are just like pet fees, only they’re refundable if there’s no pet damage when the tenant moves out.
- Pet rent is a monthly fee that tenants pay on top of their regular rent. It’s nonrefundable, and it’s usually an additional $10 to $60 per month.
Renters Insurance
Requiring renters insurance is a great way to protect both your tenants and yourself. When your property experiences damage or loss from a natural disaster, a fire, a storm, an accident, or a break-in, your landlord insurance will cover your property and belongings. It will not, however, cover your tenant’s belongings.
By requiring your tenants to purchase a renters insurance policy, which is inexpensive, you can both rest assured that your tenant will be protected in the event of a disaster, burglary, etc. When your tenant has renters insurance, they’re less likely to blame you if their belongings get lost or damaged.
Conclusion
Although it can be a tedious process, it’s important to spend plenty of time on your rental policies. The last thing you want is for a crucial policy to be missing from your lease agreement.
By including all the policies discussed in this article, you’ll be one step closer to finalizing an effective rental agreement contract.
