Investing in rental properties in real estate is one of the ways to generate stable returns on investment. You may have invested in that house for sale in kulim and thought of turning it into a rental property. However, as soon as you step into investing in rental properties, you take on the role of a landlord, and people skills will become equally as important. As a landlord, your job will be much easier if you lay down the law of the land (in other words, some specific ground rules) for your tenants to follow. Incorporate these rules as part of a tenancy agreement or lease to err on the side of caution and give you legal recourse should your tenants fail to follow them.
Here are 10 basic rules that you should address to make sure you cover all your bases.
- Due dates and late dates
Set a rule on when the rent is due and when it is considered late. Write in a grace period and late rent fees in your tenancy agreement to motivate your tenants to pay their rent on time. The grace period is usually about 3-5 days. Most landlords will charge a late fee in penalty when the rent is not received by the date as stipulated in the tenancy agreement (usually on the 1st of each month). This late fee functions to compensate the landlord for the extra hassle of back-and-forth communication, and also to alleviate the risk of the tenant paying late. The amount charged in penalty can be either a percentage of the rent, or a set amount per each late day until the rent is received in full.
- Your right of entry
The right of reasonable access is one of your rights as a landlord. However, the definition of ‘reasonable access’ will of course be dependent on why you need to gain entry into the premises. Your right of entry associated with home ownership should be balanced with the tenant’s “covenant of quiet use and enjoyment”, i.e. their right to privacy and exclusive possession. As a landlord, you need to reconcile and balance these two sets of rights in order to maintain a successful landlord-tenant relationship. Typically, you are required to give your tenants a minimum of 24 hours’ notice before you enter the premises. Reasons can include: routine inspections, repairs or servicing, and emergencies.
- Have an inventory
You should be careful when offering a fully or partially furnished rental. Make a complete inventory of every item on the property and detail the condition of these items. Incorporate this into your tenancy agreement in order to avoid any disputes at the end of the tenancy. A completed inventory will provide you legal recourse should any of the items be removed or damaged when the tenant vacates the property.
- Garbage removal and disposal
One of the biggest problem areas in renting is improper removal of garbage. Uncollected garbage makes your rental unsanitary and unsightly. It is a good idea for landlords to provide appropriately size garbage cans for storing the trash until it is time for removal. The tenant is usually responsible to take out the trash, and the landlord should have no obligation to compensate them. State clearly in your tenancy agreement how frequently garbage must be removed and where it should be placed for removal.
- Cleanliness guides
A dirty property is not only a health hazard, it is an eyesore. This affects not just the tenant in question, but also surrounding tenants as well. Establish guidelines on cleanliness in your tenancy agreement to avoid putting up with a slovenly and dirty tenant. Dirty habits such as improperly stored garbage and food can attract all sorts of vermin such as rats, cockroaches, etc. Worst comes to worst, work in an option into your tenancy agreement to evict anyone who disregards these rules on cleanliness and upkeep and poses a health hazard.
- Pet policy
Before you put up your property for rent, you will have to decide on a pet policy. There are pros and cons to tenants having pets. Pets have the ability to cause damage to your property, however, responsible pet owners can be great tenants. If you do plan to be pro-pets, state what kind of pets your tenants are allowed to keep. Make it clear in your agreement on how the pets must be cared for on the property.
- Length of notice
Work out a minimum notice period and the conditions whereby either party can serve a notice to end the tenancy. This should work both ways. The average notice period is between 1 to 3 months. However, this value is not set in stone. Whatever the length of time you decide on, make sure it is stated clearly in your tenancy agreement.
- Proper use of fixtures
Imagine having to repeatedly repair something just because it is not being used properly. In order to save yourself the headache (and the heartache), make sure you state what constitutes proper and improper use of fixtures on the property. This will give you an option to choose not to pay for repeated repairs of a fixture that has been improperly used.
- End-of-term condition
State clearly in tenancy agreement what condition you expect the property to be returned in. Baring normal wear and tear, the tenants are liable to restore the property to the condition it was in when the unit was rented to them. This includes any unauthorized alterations and obvious damages to the property. For example, if the tenants painted the walls a color, and they did not request for your written permission, they are responsible for painting it back to their original color.
- Deposit information
Typically, landlords require a two-and-a-half-month security deposit from the tenants. Make sure it is stated in your agreement of the possible use of this deposit. You shouldn’t make deductions from the tenancy deposit unless you can show financial loss, i.e. damage to the property or unpaid rent. For example, if the tenants cause damage to the property, state that the amount it costs for repairs will be deducted from their deposit.
Whatever the issue is, be sure to lay them down in your tenancy agreement to ensure that the renting experience will be pleasant for all parties.