Renting out a property is one of the most straightforward ways to make money off of real estate investment. It is always essential that the tenant in question signs a legally-binding lease. Here are some of the most important reasons why every tenant should sign a lease.

Why Every Tenant Should Sign a Lease: Lock in Rental Income

The most critical thing to remember with real estate investment is that you’re going to need a positive cash flow as often as possible. If you own a rental property and you’re not receiving a positive cash flow from rent payments, you are actively losing money. 

A legally-binding lease will mean that you have the rent locked in for a certain amount of time. Of course, there will always be occasions when the tenant is not able to pay the rent–but most of the time, tenants will prioritize rent above most other things in order to avoid eviction or other problems. 

It Outlines Tenant Responsibilities

It’s also essential to outline the obligations and responsibilities of the tenant in writing. A lease contract should be written in such a way that no renter can complain about not being informed. You should list all of the commodities provided in the lease so that they will not be able to complain about not having something they expect. 

Outlining their responsibilities will have a similar purpose; without such delineations, it can be easy for a tenant to shirk responsibility for damage and dirt upon moving out. Make sure to outline what kinds of repairs and maintenance are in their jurisdiction, and what kinds are in yours. The lease agreement can tell you what rights you and the tenants have.

Why Every Tenant Should Sign a Lease: Your Responsibilities

Every tenant expects the landlord to take on a portion of the responsibility for the upkeep of the property. Every property will be different, but most of the time you can expect to replace utility systems when they fail. This includes heating, cooling, electricity, plumbing, and more. If the problems are a result of damage on part of the tenant, you can charge them or revoke their security deposit. Cleaning will probably be a shared responsibility. Most often, the tenant is in charge of internal cleaning and the landlord maintains the grounds.

A lease is critical. You cannot run a functioning rental property without one. If you don’t have a legally-binding contract, it will be very hard for you to enforce rental payments. A lease is a basic must-have way to guard against dishonesty on the part of either party. 

Did you enjoy reading this article? Here’s more to read. How to Form a Better Relationship With Tenants

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