Renting or Leasing a Property: What Forms
are Needed?
There
are two ways of earning from your real estate investment: sell it at a
higher price, or rent or lease it out.
Finding possible tenants are not that different from finding buyers
for your home—you place ads, distribute flyers, arrange appointments
(or open houses) so they can view the property, and negotiate for
terms.
The obvious advantage of renting out the property is that you earn
money while still retaining ownership. But it does have its own share
of headaches—like the occasional tenants-from-hell who either skips
on monthly payments or damages it during his stay. Of course you could
always kick them out, but you’ve already incurred losses: the cost of
repairing the property, the earning opportunities lost while finding
another tenant, and the devaluation of the property because of the
damage.
That’s why it’s very important to screen your tenants through
the rental application form. It includes all the information you need
to do a background check, evaluate their ability to pay, and even track
them down in case he trashes your beloved apartment and skip town
before you find out.
Once you’ve found your best candidate, you also need to protect
yourself (and him!) with a residential lease. This basically outlines
the terms in which he can use the property, his obligations (and
yours), and any rules on damage and repair. It also has a description
of the property—so you never end up fighting over whether or not the
bathroom tiles were cracked before or after he moved in—and your
policy on subletting.
In other words, the residential lease prevents the ugly squabbles
that often occur between tenants and landlords. What if the dog ruins
the carpet? What if the roof leaks or the cabinet door falls off? What
if he abandons the property? What if he misses a payment? Better clear
it now, than argue about it later on.
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