We bought our first rental property around 1995. At the time, we didn’t know anything about managing rental property and tenants. Needless to say, we knew nothing about lease agreements. The realtor we used gave us a lease written by the Georgia Association of Realtors (GAR). We thought it was the greatest document ever written!
As our experience quickly grew – and after attending several land lording seminars – we realized the GAR lease was terrible. Why? First, because it’s written in legalese, almost no one – especially landlords and tenants – understood the contract. Lesson one: A lease needs to be understandable, which means it should be written in English, not Latin. Lesson two: The realtor told me the GAR lease was written with the intent of being fair to both the landlord and tenant. Nothing personal, but since it was our house that we had bought and were paying for, Kim and I weren’t interested in being fair – we wanted an agreement that was ironclad and protected our assets. We quickly switched to a pro-landlord lease agreement. It worked great.
Over time, as we continued to learn hard-knocked lessons from our tenants, we kept adding new sections to the lease. This caused the document to get longer and longer. In 2006, while going through some old paperwork, I ran across that original pro-landlord lease I had first used in 1997. It looked nothing like what I was using in 2006. The biggest difference was length. The old lease was eight pages long. My 2006 lease was a whopping 14 pages. Boy, had I gotten carried away.
The reality was this: As of 2006, I had only taken two tenants to court. In other words, I had learned that the secret to working through landlord-tenant problems was to sit at the tenant’s kitchen table and find a win-win solution that didn’t involve attorneys and judges.
With this new realization, I rewrote my lease and cut out a lot of the jargon. My lease shrank from 14 pages down to 7 pages, and it was much more understandable and a lot easier to read. This takes us back to lesson one: A lease needs to be understandable.
Today, I’m a much wiser landlord than I was when I started. I’ve learned that simple is better than complex. After all, why say something in a thousand words when ten will do? With this said, I’ve begun another rewrite of my lease. My goal is to have a two-page rental contract.
Here are the basics: Tenant agrees to 1) Take care of the property; 2) Be comfortable to work with; 3) Pay his rent on time. Landlord agrees to 1) Fix things when they break; 2) Be comfortable to work with; 3) Pay the mortgage on time. It doesn’t get simpler than this.
I hope this helps you to be a better, more effective landlord. Bill and Kim’s North Georgia Real Estate Investors Association meets on the second Thursday of each month, from 7 to 9 p.m., at the Hilton Garden Inn off Main Street in Cartersville, Ga.
For more info, go to REIoutpost.com.