Landlord-tenant conflicts are not uncommon. It’s one of the most time-consuming issues faced by landlords. And most of the time, it does not end well. According to a 2020 National Low-Income Housing Coalition study, an average of 3.6 million eviction cases are filed annually in the United States. Most of these cases are due to payment disputes between the landlord and tenant.
It doesn’t have to be the case, though. As a landlord or property owner, you can avoid potential conflict by having a sustainable lease agreement with your tenants. That means having a lease agreement that is beneficial for both parties and will last for the duration of the tenancy. Here are several measures you can take to ensure your lease is sustainable.
Lower Your Rental Rates
One of the best ways to ensure a sustainable lease agreement is to lower your rental rates. It might sound too obvious, but it’s worth mentioning. A high rental rate might drive potential tenants to find a better deal elsewhere. A lower vacancy price, on the other hand, gives you more negotiating power with your tenants.
A lower rental rate comes with fewer vacant units and less time spent looking for new tenants. You can lower vacancy rates by offering incentives to prospective tenants, such as lowering rent prices as is or waiving security deposits. These strategies will help you attract and retain tenants while making a profit.
However, you must also be careful not to lower your rental rates too much. If you do, you might find yourself in a situation where you’re not making enough money to cover your expenses. But with enough market research, you should be able to find a happy medium between making a profit and attracting tenants.
Allow Rental Deposits
Another way to make your lease sustainable is to allow rental security deposits. It gives tenants peace of mind knowing that their deposit will be returned to them at the end of their tenancy, as long as they uphold their end of the agreement and don’t damage the unit.
Allowing rental deposits also provides a security blanket for landlords. In the event that a tenant doesn’t pay rent or causes damage to the unit, you can use the deposit to cover those expenses. In that case, you or your tenant wouldn’t have to incur any out-of-pocket expenses. Thus, it’s a win-win situation for both parties.
Agree with Automatic Payments
Agreeing with automatic payments is a good idea if you want your lease to be sustainable. That means rent will be automatically withdrawn from the tenant’s bank account on a set day each month.
Doing so eliminates the hassle of chasing down late payments and ensures you always receive rent on time. It also streamlines the whole process for both you and your tenant. No one has to remember to write a check or bring cash to the rental office. The rent is simply withdrawn from the tenant’s account on the first of every month.
Of course, you should still require a physical copy of the signed lease agreement. This way, both parties are held accountable, and there’s a record of the agreement.
Accept Rental Guarantee
As a landlord, you can ensure your lease agreements are covered by accepting a rental guarantee. It’s a risk-management tool that protects your investment and ensures you receive rent payments even if the tenant defaults on their lease.
The rental guarantee is usually provided by a third-party company, such as 12Cheques. These companies will cover the cost of missed rent payments, up to a certain amount, for a fee. So, you won’t have to worry about losing money if your tenant can’t make rent.
Moreover, the rental guarantee gives you peace of mind knowing that your investment is protected. And it offers tenants the security of knowing their rental payments are guaranteed, even if they lose their job or have another unforeseen financial setback.
Ask Tenant to Get Renters’ Insurance
Finally, another measure you can take to ensure your lease is sustainable is asking the tenant to get renters’ insurance. This insurance will protect them financially in case of damages or accidents in the unit.
It’s essential to have this protection in place so that you would not get held liable if something happens. As a result, it would offset any potential legal fees or expenses you might incur. Renters’ insurance is relatively inexpensive and easy to obtain. So, it’s a good idea to require it as part of the lease agreement.
These are just a few measures you can take to negotiate a sustainable lease agreement with your tenants. By taking these steps, you can protect yourself financially and ensure that your tenancy is lasting and fruitful for both parties involved.