How to Create a Lease Agreement for a Home

When you own a home that you are considering leasing (hopefully for a profit), it can become more challenging than you might initially anticipate. There are many considerations that you must consider before arranging a lease agreement, and entering into it with a tenant. Here is a comprehensive guide on those considerations as well as the steps outlining the lease agreement for a home when you're entering into the arena of being a landlord.

Things You'll Need

• Real estate forms for your state

Instructions

Before You Begin

1. Review your mortgage statement (if applicable). This is important when setting the correct rent amount. You will need to consider how much money you need to charge in order to clear the principal, interest, taxes and homeowner's insurance while turning a profit.

2. Research the market rates for rent in the area. This is important because you don't want to come in too high or too low. You must be competitive with other rental properties in the area. The best way to learn current rental rates for free is to contact a real estate professional and have them do an analysis of other properties in the area most comparable to yours.

3. Contact three property management firms in the area. While many individuals believe they can manage their property on their own, it is advisable that you hire an experienced manager to detail with the details of day to day tenant needs. Factor their management fee into your rental charges.

4. Set up a property management bank account. This account will be used for you to deposit rent payments as well as deduct property expenses that you will incur when the property is inhabited by tenants. Provide access to this account to your selected property manager.

The Lease

1. Determine your flexibility with rent payments and repair expenses, but be realistic. After you have determined the guidelines of who will inhabit your property, the amount that they will need as a deposit, whether or not you will allow pets in the property and any additional deposits that you require, you are ready to find a tenant and enact a lease agreement.

2. Place a "For Rent" sign in the yard of the property. Include your contact information or the information for your property manager. Create property fliers and have your property manager post the property on the multiple listing service for your city.

3. Write your lease paperwork after you have found a tenant. Be sure that you pull their credit report files and other pertinent information such as rental and criminal histories, depending on your specific needs for your property.

4. Use your state regulated leasing forms with your tenant. This will help you avoid any legal misunderstandings or problems during the tenancy of your property. Should you have questions in completing these forms, ask your property manager.

5. Collect your security deposit and ratify the lease agreement. Your lease agreement will dictate a move-in date for your tenant and you will then turn the file over to your property manager who will handle the needs and requests of your tenant moving forward. You have successfully created and executed a lease agreement on your home.

Tips & Warnings

• You can download state approved lease forms from your local real estate board.

• Do not create your own lease agreement paperwork. This can create lawsuits and fines during your lease agreement or after.