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Find
Forms for Your State
 For
the majority of investors, Real Estate investment is a long term program. They buy a property, rent it and collect
a monthly rent, and wait for the value of the property to rise enough that it makes sense to sell it. This may
take 2 years, 5 years or 20 years, depending on the market and the investor's financial requirements.
Sounds simple, right? To some degree, it is. If the tenant pays the rent, the landlord investor either has good
cash flow (it the property is owned outright), or the rent, hopefully, is at least covering the mortgage, insurance,
and tax payments. There may even be some good tax advantages (consult your tax advisor).
Renting, though, can be a time consuming process, and the return is usually slow in coming--years instead of months.
This is why a number of investors opt to turn
a property quickly for a profit, rather than waiting for
appreciation to take its natural course. At the very least, you will need to become familiar with the tools and
tricks related to finding tenants, choosing them, and keeping
tenants if you want to be successful (and profitable).
In addition, just some of the problems you may--or probably will--have to deal with:
- Late night or frequent phone calls for repairs or problems.
- Deadbeats.
- People who won't maintain the property--or worse, damage it.
- General whiners.
- Slow payers.
Still, if you are prepared, the long term prospects for investors who
rent their properties look good. If you decide that it is the right course for you, get your hands on an excellent
manual (a recommended selection is at the bottom of this page) and follow the suggestions as closely as possible.
Learn from the successes--and mistakes--of others!
Leases
Legally, you will need some sort of rental agreement with your tenants,
whether it is for a short term (month to month) or longer term (1 or more years) rental. Leases are important because,
if they are properly written, will spell out exactly what the terms are, what you expect from the tenants, and
what they should expect from you.  Be specific! You don't need page after page of legalese that no one understands, but you do need to
clearly state the terms of the lease. It is far preferable to have it spelled out in advance rather than getting
into an argument with a tenant when they expect something that you never intended.
Some of the components of a standard lease agreement
Who: Specifically
who the tenants are and who the landlords are
When: The exact dates of the rental period. Policies regarding
lease renewals.
How much: The amount of rent, stated in a total amount for the
entire lease term, and how it is to be paid, for example $XXX per month, payable on the first of the month.
Security deposit: How much, how it is held, how it gets returned.
How: How rents are to be paid, to whom, and where.
What: What is included in the rental and what is not included
in the rental. Be specific when it comes to utilities. Which maintenance and repair items are your responsibilities
and which are the tenants.
Rules: Any special
rules regarding the rental.
Pets: What your
policy is. Spell it out clearly to avoid surprises.
We have included a sample lease to show how one can be structured. Use it for reference only. Each locality has
very specific laws and regulations regarding rental contracts. Familiarize yourself with them so that any lease
you develop meets the letter of the law! For a complete set of agreements that are necessary for any Real Estate
investor, visit the FindLegalForms site, which
has many application, lease and other forms tailored to your state. More information here.
More information
Although there are numerous books on Real Estate investment as it relates
to rental property, if you only get one it should be Landlording : A Handymanual for Scrupulous Landlords and Landladies Who Do It
Themselves. It is probably the most extensive handbook available
and covers virtually every aspect of long term Real Estate investment.
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