No two leases are the same. As a landlord, it’s your right to decide what you want your rental policies to be, as long as you aren’t breaking any laws.
It’s important to decide your rental policies ahead of time and clearly state them in your rental agreement contract.
With that in mind, here are the top five best rental policies for landlords:
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Table of Contents
Security Deposits
Security deposits provide landlords with a layer of protection in the event of property damages or unpaid rent when a tenant moves out. Security deposits should be paid with the first month of rent before a tenant moves in. Your lease agreement should specify the amount of the security deposit as well as when and how it must be paid.
Before you finalize your security deposit policies, it’s important to consider legislation that affects your business. Every state has different security deposit laws which regulate the maximum amount, when the deposit must be returned, and even how it must be kept in some states. Research your state’s security deposit laws before setting your policies.
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Pet Rent/Fees
A recent survey by Apartments.com showed that 90% of renters have pets. Although pets pose an added risk to your property, not allowing pets significantly limits your pool of renters. We recommend allowing your tenants to own pets, but to do so with a rental pet policy.
There are a couple of approaches you can take when it comes to your pet policy. First, you can charge a pet fee, which is a one-time, non-refundable fee that a tenant pays when they bring a pet. Pet fees generally range from $50-$500. Your other option is pet rent, which is a monthly fee a tenant pays on top of their normal rent, usually between $10 and $60.Â
Not only does allowing pets increase the likelihood of filling your vacancy, but the added revenue from pet fees or pet rent offsets the potential damage that pets might cause and will usually make you more money.
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Late Fees and Grace Periods
In order to ensure that your tenants pay rent on time, you must establish a late fee policy. Usually, the threat of late rental fees is enough to incentivize tenants to pay on time, but if they miss a payment, it’s crucial that you enforce your late fee policy. If you don’t, your tenants will start taking advantage of you.
Grace periods are another integral part of your rent policy, and in many states, they’re required by law. A grace period gives your tenants a few extra days after the due date to get their rent payment in, which provides your tenant with flexibility if they get paid the same day that rent is due or if funds need a couple of days to transfer between bank accounts.
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Renters Insurance
To protect your tenants and even yourself from issues later on, it’s a good idea to require your tenants to purchase rental insurance. While landlord insurance covers your property and belongings in the case of an accident, storm, fire, or burglary, your tenants’ belongings aren’t covered.Â
Renters insurance doesn’t just protect your tenants; it also protects you. A tenant with a renters insurance policy is far less likely to sue you if their belongings get lost or damaged in a disaster on your property. Furthermore, if something were to happen, your tenant’s renters insurance would kick in before yours does, which might save you the hassle of dealing with your own insurance provider.
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Subleasing
When a tenant must move out before their lease is over, they may want to sublease to another tenant to finish the term.Â
Subleasing can be beneficial because it reduces vacancies and means you don’t have to go to the trouble of finding a new tenant. With that being said, you should have clear policies in regard to subleasing because you don’t want to run into problems with a bad subtenant. Good policies to have might include:
- Requiring your consent on the sublease
- Running a full tenant screening on the subtenant
- Retaining final say
- Requiring subtenants to pay rent directly to you
Conclusion
Deciding on your rental policies may seem time-consuming, but having good policies will save you so much trouble down the road. When you’re drafting your lease agreement, be sure to take the five policies discussed in this article into consideration.
