Your lease agreement is the only legal document that has the potential to protect you if you end up in court. It’s crucial that your lease be iron-clad and spell out all the details of what constitutes acceptable use of the property and which actions are not.
In many cases, in order for something to be prohibited, it must be spelled out in the lease. Otherwise, if it’s not illegal, you can’t evict your tenants. For example, if you don’t specifically prohibit water beds, you can’t evict a tenant for owning a water bed. If it’s not illegal to own one, it’s not a lease violation unless you explicitly state so in the lease.
With that said, it stands to reason that many potential tenants won’t like some of the lease terms they read. On one hand, it’s your property and you should be able to do with it as you please, including making your own rules.
However, being too rigid can deter renters and create issues with people who begrudgingly sign the lease. The best course of action for you, as a landlord, is to remain open and flexible to the idea of negotiating your lease when appropriate.
Have your property manager handle all leases
The first key to negotiating a lease with tenants is to start with a solid lease and know what is not negotiable. Stick to your standards because if you start lowering them just to rent your property, you won’t get the best tenants. For example, don’t negotiate evictions or low credit scores – it’s too risky.
If you aren’t skilled in the art of negotiation, or you don’t have a lot of experience as a landlord, you’ll be better off having a professional property manager handle your leases from start to finish, including negotiations. It’s important to remember that all successful negotiations begin with a strong lease as a foundation because negotiations need to be clear. The more detailed your lease is regarding the terms, the easier it will be to negotiate with a tenant. Sometimes it’s just one minor detail that a tenant will want to change.
If you’re trying to manage your properties on your own, you might find creating a strong lease to be a challenge. It really does require the help and expertise of an attorney to get it right. If there is anything illegal in your rental agreement, it won’t hold up in court, which will be a huge (and possibly expensive) disappointment if you ever end up involved in a lawsuit.
This is why smart property investors hire an Austin property management company to handle their leases. Professional property managers have access to a lawyer on retainer and have approved lease templates that comply with federal, state, and local laws. These templates have been created and reviewed by legal professionals and are ready to adapt to your needs. If you try to do this on your own, you can expect to pay thousands of dollars in fees to have an attorney draft and/or review your lease.
Know what is negotiable
Knowing what is negotiable will make it easy to say “no” to tenants when they ask for something off the list. When you’ve already thought about it, you won’t feel pressured to negotiate something in the moment and regret it later.
Some of the things to consider making negotiable include:
- The amount of rent due. If a potential tenant with an excellent rental history, great credit, and solid income asks for a lower rent price, it’s worth considering, especially if they are willing to sign a longer lease or take on certain maintenance tasks.
- The duration of the lease. Not all tenants want to sign a 12-month lease, so when you offer other options, like 3-month and 6-month options, you might get someone in faster.
- The security deposit amount. The standard is to collect a security deposit in an amount that matches one month of rent (sometimes double), but that isn’t always doable when someone is still waiting to get their last security deposit back. Consider lowering the deposit amount for renters with great credit and rental histories.
- Pet rent and pet policies. Not every pet will be destructive, but it’s not something you can predict just by meeting a pet. However, a little Pomeranian or teacup chihuahua is highly unlikely to do any serious damage. Also, pet rent can be a little too much for some people, and this often forces them to get fake paperwork to say their animal is an emotional support animal. The bond between humans and their pets is huge, and people aren’t going to give up their animals just to rent a house. Consider a more lenient pet policy to accommodate people with pets.
These are just some of the terms you might be willing to negotiate, and may not match your list. Before going over a lease, make sure you know which items you are willing to negotiate.
Get legal advice
Before negotiating anything in your lease, remember that it is a legally binding contract and if anything in the lease is not valid, it won’t hold up in court. Make sure you consult with an attorney to verify everything complies with federal, state, and local laws.
A huge benefit to hiring an attorney is having access to legislative changes that need to be reflected in your lease. For instance, during the pandemic, many states passed permanent laws that prohibit no-cause notices to vacate.
Let Green Residential handle your leases
If the idea of negotiating lease terms with a tenant doesn’t thrill you, we can help. At Green Residential, we help Austin property investors with full-service property management services that includes lease creation and negotiation. When you work with us, we’ll get you the reliable, high-quality tenants you deserve and will negotiate the lease terms on your behalf to your standards.
Managing rental properties on your own can be tough. We can make it easier. Contact us today for a free property analysis to learn more about our services.