When I mentor new investors, I encourage them to create an airtight lease. This is of prime importance, for landlords everywhere. The lease doesn’t have to be 10 pages long, contrary to popular belief. Many of those lengthy contracts contain what I call “legal schmegal” language, and the tenant’s eyes gloss over half way through the first page. It’s ridiculous.
I combined and condensed a couple leases and changed the language into laymen’s terms, and I’m really happy with the results. Of course, I had my real estate attorney take a look, to make sure I’d covered all the necessary bases. He was impressed with the brevity of it, and gave me a thumbs up. 🙂
So, great, right? Well, yeah, but what good is it if I don’t enforce it? When I started out in rental properties two decades ago, I wanted to think the best in everyone. I allowed people to slide on their rent, thinking they’d get it caught up as promised. My trusting attitude and naivete came back to bite me … big time. I was losing money faster than I was collecting it. Terrible!
A lease is a meaningless piece of paper if you don’t follow it. I had an excellent lease but it wasn’t helping me! I had to have a serious talk with myself and get on a better track, or I was going to go under. Now, if a tenant falls behind, we make a plan (in writing) to get caught up quickly. If it doesn’t happen, the tenant is moving or evicted.
And, this isn’t just about late rent. It has to do with every single clause in your lease. Noise violations, police visits, not keeping the apartment/yard clean, etc. Plan your lease carefully, and make sure you’re willing to follow every item in that document. It’s the basis of your rental life — your “burnout prevention plan” is built around that lease and your willingness to be the enforcer!