Besides creating a typical tenant lease, strive to make it more – make it a tenant satisfaction agreement. The smart property manager can craft a lease that includes incentives and concepts that can turn average residents into productive, marketing, money making partners. These satisfaction clauses can be added to the basic lease to create a good relationship right from the start.

Here are some tips on creating your own lease. Most importantly, even if you create your own lease, you should still take it to a local real estate attorney for a final review before using it. You might want to start with a standard prewritten lease, and then modify or add to it as needed. Make sure you understand your local and state laws, and keep your writing plain and simple.

 The Basic Lease Agreement

1.  Include the full names of all prospective tenants – these will be the only ones held accountable if there is a dispute.  Be sure to include both names of a married or unmarried couple. Remember, if one tenant skips, you should be able to hold any other party on the lease responsible for the rent. Also, if any one tenant violates the terms of the lease, you should be able to terminate the lease.

2. Spell out more than just the rent amount – besides including the rent amount and the day rent is due, also include how it should be paid, such as by mail, in person, online, direct deposit, etc. List acceptable forms of payment, such as ‘personal checks only’, money orders, or credit cards, remembering that you may pay a fee for credit card processing. Also include any charges if a check should bounce, when rent is considered late, and any late fees that the tenant is responsible for.  Be sure to include if you are going to apply any late fees prior to applying money received towards the actual rent.

3. Make sure you specify who can live at the residence. This would normally be only the names on the lease and any of their minor children. This gives you the right to evict any other people that might move in later, such as relatives or friends, plus it protects you if the tenant tries to sublet the rental without your permission.

4. Be specific on security deposits. Many legal hassles develop out of this part of the lease, so make sure you spell out the amount of the security deposit, conditions for the return of the deposit, acceptable deductions, and when it will be returned. Be sure to include how the deposit can be used by either party, such as deduction for cleaning costs, additional costs for pets, damage costs and other fees. Make sure the tenant knows that the deposit cannot be applied to rent payments.

5. Specify the lease term of your rental agreement. If the lease runs for one year, outline if it reverts to a month-to-month after that, and the number of days notice you will need to renew the lease, if it is renewable.  If the lease self-renews, be sure to specify the number of days notice that either you or the tenant must give in order to move out.

6. Clearly outline the obligation of both the tenant and yourself regarding repairs and maintenance. Your tenant will probably want to make alterations such as painting, running wires, pictures, alarm systems, etc, so make sure your permission is required first. You should require that the tenant keep the property clean and let you know if anything needs your attention right away.  Make sure that you define who owns an improvement – usually a fixture improvement to the wall or ceilings would become the property of the owner unless restored to the original condition.

7. To be sure that you do not get charged with illegal entry or privacy violations, be sure that you include the rights you may have to enter the premises. Normally, the landlord cannot enter without the tenant’s permission, but you should have the right to inspect the property, show prospective buyers, make repairs, and provide maintenance with proper tenant notification and during acceptable hours unless in case of emergency.  You might want to include the right to show the property to prospective tenants after notice of termination is given, again with proper notice to the current tenants.

8. In case of a dispute, you must outline in the lease which party pays attorney costs. Many standard leases make the tenant responsible for paying to enforce the lease provisions in case of a dispute, but your state laws may not permit that, instead forcing the loser of a lawsuit to pay the attorney fees.

 Incentive Clauses

Above are just some of the basic provisions of a lease. However, you can also turn your lease into a valuable marketing tool for your business while at the same time providing extra satisfaction for your tenants. Here are just a few basic ideas, which will be covered in more detail in a future article.

1. Award special benefits to your tenants the longer they stay. At each tenant lease anniversary, provide a financial or other type of award, provided they are on time with all of their rent payments.

2. Provide incentives for your tenants to recommend you to other prospective tenants.

3. Provide an incentive for your tenants to eventually own the house they currently rent, provided they remain in good standing as a tenant.

4. Encourage your tenants to make upgrades to your property if they have the skills. You can provide materials and they can provide the labor.

 Important Added Clauses

Most times, a basic lease is not enough. There are many other important clauses that many landlords tend to neglect, yet they become invaluable if there is ever a dispute. Here are some examples of clauses that can be added to your lease agreement.

• Parking – how many vehicles (cars, boats, motorcycles, etc) can be parked at the residence?
• Residential use – can the tenants run a business? What kind?
• Garage sales or auctions? Are you going to permit these? How often?
• Change in status (any changes in the lease application, such as employment)
• Subletting – is it allowed? How many residents? What notification?
• Co-signer on lease – should you add another responsible party as a guarantor?
• Partial payment of rent – how is it handled?
• Returned check fees – how are you going to handle returned checks?
• Bankruptcy – what if your tenant files for bankruptcy?
• Lease violations – what are your rights? What are the tenant’s rights?
• Absence of tenant – what is the tenant disappears? Can you get into the rental?
• Furniture lien – can the tenant possessions be taken?
• Increase late fees – can you charge additional late fees if the tenant is often late?
• Judgment collection – who pays?
• Utility bills – what if the tenant defaults?
• Emergency repair – what if you have to cut off the water for repairs?
• Problem neighbors – how do you handle complaints?
• Disasters – what if you can’t fulfill your landlord obligations because of a disaster?
• Illegal activity – make sure you can take action against drug use, explosives, firearms, etc.
• Quiet enjoyment – you should insure that the tenant does not intrude on other people’s rights
• Smoking – make sure your rules are clear.
• Pets – how many pets? What additional deposit? What about additional cleaning costs?
• Yard upkeep – Make sure your property looks neat and is safe.
• Health and safety codes – Be sure your tenant doesn’t not violate these.

I hope these ideas make you think about how important your tenant lease can be. With the right rental agreement design, you can create a lease that will protect your property, promote timely rent receipt, motivate your tenants, and protect your legal rights as a landlord.

Paul Toller is VP of W G Software, Inc. developers of the Tenant File Property Management Software (http://www.TenantFile.com). He has over 20 years experience in consulting and software development for real estate. Mr. Toller also markets a product for easy creation of leases called the Lease Designer software.  (http://www.LeaseDesigner.com). The Lease Designer product allows the user to select from several pre-written leases, choose from over 200 pre-written rental clauses, and add house rules templates to the lease. The user can also write their own leases and clauses, modify the existing templates, or import leases from other programs.

You can view the video here: http://www.tenantfile.com/TrainingVideos/TenantFileOverview.flv

This video is 14 minutes and presents all typical aspects of using the Tenant File Property Management Software in a typical month cycle.

No doubt, you need automation. Otherwise you are paying your employees to do redundant work. Here are some features that you should insist on for your rental management software.

Automated features you need:

Charging of rents

Invoicing tenants by mail or email

Posting of rent income (monthly, weekly, or daily)

Charging management fees to owners

Rent increases

Running credit checks from within the software

Notification of expired leases

Important date reminders

CAM charges for commercial property

Recurring payments such as mortgage or insurance payments

Owner payments

Automatic posting of late fees

Scheduling calendar

Post fixed amount or percentage of rent to ledgers

Emailing Owners, Tenants and Vendors

Accepting rent online

Paying Vendors and Owners online

Creating a web listing for vacancies

Automatic creation of a Craigslist ad

Syndication of your vacancies on the Internet

That’s quite a bit, right? Surely you need the ‘cloud’ to do all that – NOT SO! The Tenant File is a desktop software, yet it does everything above! So why would you ‘need’ a web-based software. The answer is clear: you don’t.

In fact, your desktop property management software will run faster than online software, and you’ll have the security of knowing that your valuable information is right on your computer. It is just 3 clicks to backup your data!

If your entire tenant management business is on the web, what happens when the Internet is down, or their remote server isn’t working? The answer is that your entire business is down. With the Tenant File, you can keep right on working.

Lastly, consider the long term costs and the service. The Tenant File is a one-time cost, and all updates are affordable and completely optional. We provide free phone support to get you started, then we still provide free web support after that. The website at http://www.TenantFile.com provides answers to common questions and has free updated versions of the full User’s Guide. This kind of support is rare for any software company. That is why the Tenant File has been a leader in property management software for over 12 years.

Besides the typical protections, strive to make a ‘tenant satisfaction agreement’. You can create a lease with incentives that will let your tenants assist you with marketing your rentals. Not only will it create a better relationship with your tenants, but it will help you learn new concepts and ideas for being a better property manager.

• Be sure to include both names of a married or unmarried couple. If one tenant skips, you should be able to hold any other party on the lease responsible for the rent.
• Itemize all accepted forms of payment such as ‘personal checks only’, money orders, or credit cards and any fee for a credit card convenience charge.
• State the late fees clearly and if you are going to apply late fees prior to applying the actual rent amount.
• Specify exactly who is allowed to live at the residence and how long a guest might stay before they will be considered a ‘resident’ and not a ‘guest’. This might avoid a ‘subletting’ situation.
• The security deposit is the most contested part of the lease, so exactly spell out what your deductions will be and that deposits cannot be applied to rent owed.
• Clearly specify your obligations and the tenant obligations towards repairs. Make sure the tenant is required to have written permission to alter anything in the rental except maybe hanging pictures or posters.

 Incentives for your tenants

Besides the basic lease, you can also turn your lease into valuable marketing. Your tenant will appreciate your special considerations.

The longer they stay the better it gets. At each tenant lease anniversary, grant a financial or other type of award, provided they are on time with all of their rent payments.

• Provide incentives for your tenants to recommend you to other prospective tenants.
• Provide an incentive for your tenants to eventually own the house they currently rent, provided they remain in good standing as a tenant.
• Encourage your tenants to make upgrades to your property if they have the skills. You can provide materials and they can provide the labor

Follow these basic guidelines and you will develop a solid long lasting relationship with your tenants.

Article author:

Paul Toller is VP of W G Software, Inc. developers of the Tenant File Property Management Software. He has over 20 years experience in consulting and software development for real estate. Mr. Toller also markets a product for easy creation of leases called the Lease Designer software. The Lease Designer product allows the user to select from several prewritten leases, choose from over 200 pre-written rental clauses, and add house rules templates to the lease. The user can also write their own leases and clauses, modify the existing templates, or import leases from other programs.

You can weed out 50% of the property management software on the market if you focus first on what you ‘really’ are looking for. If you focus on software that doesn’t cost more and provide more than you need, you’ll save time and money. Here are some of the differences:

• Just get software to manage your property – not a ‘do it all’ software. You’ll do better using something like Quick Books to manage your office payroll and assets. However, look for software that can export into Quick Books if needed.
• You might not need budgeting, so why pay extra for it?
• Do you need double-entry accounting – property management is better suited for cash in and cash out accounting.
• Tenant Screening built in? You’ll be paying for a markup because the PM software will just be a 3rd party in the transaction. Look for good discounts offered by your software vendor here.
• Don’t be impressed by the outside ‘shell’. Download a copy and try it out before purchasing. It may be hard to use and inefficient for your purpose.
• Make sure it can do the basic things: automatically post rent, management fees, and late fees, create checks and deposits, maintain separate ledgers, easy editing of your information.
• Make sure it can be set up for ACH bank transfers to receive rent payments and pay your Owners and Vendors.
• Be sure you’ll have some free phone/email support to get started with the program. No matter how easy the software is, you’ll need a little assistance.
• Don’t go for online software – with desktop software, you can be sure your data is safe and secure. Plus, it will run a lot faster and won’t stop your business if the Internet goes down.
• Make sure it is not priced more than the current market!

Ask youself these important questions, and your quest for the right Tenant Software will get a lot easier!

Paul Toller has worked in Real Estate consulting and Computer Software Development for over 20 years. He is co-developer of the Tenant File Property Management Software http://www.TenantFile.com. His latest release is a tenant lease creation software called Lease Designer http://www.LeaseDesigner.com.

Myth #1: Only web-based systems handle online tenant services
Of course, enabling a tenant to pay online is an advantage. They can pay rent 24/7 from virtually any location. Payments can be set up as recurring, eliminating the need for the manager to collect the rent in person or through the mail. The fact is that an online payment service is not unique to a web-based product. The Tenant File Property Management Software allows the property manager to have a branded site that their tenants can access securely and pay their rent with a credit card, eCheck, or by setting up recurring rent payments. All transactions are not only downloaded into the software, but recorded in the bank register and the management fees can be automatically posted on each payment.

Myth #2: Improved record-keeping
Whether your accounting is online or on your desktop, the record keeping is a function of the software, not the media. As a matter of fact, what web-based vendors don’t tell you is that since the data is traveling thousands of miles back and forth on a server, online software is inherently slower than desktop based software. Gone are the instantaneous changes when you make an entry or run a report. There is a lag time (read ‘wait time’) while the data is being processed. That makes the software seem ‘sluggish’ and is not conducive to a busy business office.

Myth #3: Better security
Web-based software may tout automatic backups, but just exactly ‘where’ in the ‘cloud’ is your data? It may be better than never making backups… but certainly having all of your critical data on some unknown computer somewhere on the web is not better than having it in your own hands. How is your data backed up? Who has access to it? What if your passwords are stolen? These are questions that you should be asking. With desktop software there is no ambiguity. You can still be reminded to backup, and your data is on your own computer and backed up on CDs, DVDs, memory sticks, or external hard drives, and you have all the control. When the web-based server goes down (and they all do), what happens to your data? How long will it take to restore the information while your business is at a standstill? These are factors that you should carefully consider since they could drastically affect your entire business.

Myth #4: You business will run more smoothly
Well, other than the sluggishness nature of the entries themselves, what will happen if there is an Internet issue? Anyone that has worked on the Internet knows it is not 100% reliable. Maybe it is not the fault of the web-based server (but it could be), but ‘any’ interruption of the Internet connection will put your business at a standstill. No rent collection, no paying vendors and owners, no business at all. Is that worth the risk? You will hear lots about ‘redundancy’ of your information, but that is of no help when your connection is lost. Think about it.

Myth #5: More features such as website creation
As a property manager, you have probably been ‘swamped’ with offers to have a website created for you. There are some incredible sites for realtors and property managers. The web-based software companies will certainly sell you an integrated site, but most likely, since that is not their main business, it will cost more or not be as good as the ones that are developed by companies that only design websites for real estate. And what does the ‘integration’ part mean? Mainly it means that your data, such as interior/exterior features about your rentals, and photos can be uploaded from the software to the website. Desktop applications can do that, too. The Tenant File has an optional application that will take your detailed vacancy information with photos and upload everything to a website with one click of a mouse. Another click will take the same information and broadcast it to major real estate search engines throughout the world. Still another click will create a Craigslist ad for you. And the procedure is much easier and faster than a web-based software can do.

Myth #6: Better communication with Owners
Some web-based products advertise that your owners can see their accounting at any time. That may sound interesting, but most property managers don’t want that. Most managers don’t want their owners to constantly monitor their online accounts because they may not always be up-to-date and have not been properly reviewed for mistakes or omissions. That could result in unwanted calls from the owners asking why the rent wasn’t posted yet and other questions that would be avoided once the accounting was finalized. With the Tenant File software, the property manager can email all of the statements to the owners once the accounting is reviewed and completed. As with the online tenant payments, you can also get set up to pay your owners directly to their bank accounts. In fact, you can also pay any Vendor through direct deposit as well.

Myth #7: Better pricing
It is true that there is less cost up front – that is because you are making monthly ‘lease’ payments. Just like renting a ‘rental car’, you will pay less up front, but over the long run you’ll pay much more, and you still won’t own the product. Worse yet, and unlike a car payment, the cost could be increased or the company could disappear, leaving you in big trouble. The average small property manager who is paying $20.00 monthly to the SaaS company is really paying $240.00 per year to start, usually not including a website or other services. So in 3 years, they will have paid a whopping $960.00 and still they don’t own the software. If you are a bigger property management company your costs are possibly doubled or tripled. With desktop software like the Tenant File, you make a one-time purchase at a much lower cost, which you can fully write-off as a business expense.

Myth #8: No need for training
That depends completely on the software. A well designed software will just ‘make sense’ to the user right away and not require much training, if any. If you have to attend a class just to operate a rental management software program, it is probably too difficult to begin with. But everybody ‘does’ need some help to begin with. Does your software offer any free personalized phone support? The Tenant File does. What about later on if you run into questions? You can still receive free online support with the Tenant File software. Make sure you ask about this if you are considering web-based software.

Myth #9: It’s the newest trend
We aren’t talking about hairstyles here – this is your company, your livelihood. You have to decide what is best for your business. The Internet is wonderful and has revolutionized the world. Our programmers are top web programmers as well, so that we can provide the best product interfacing with the Internet. Maybe at some point the speed, data security, costs and other issues will improve, but right now property managers want security, stability and confidence that the software running their company will be stable, the company will not go out of business, and that the product is easy to learn and use.

Myth #10: Easier to use
We back up what we say. From our website you can download a fully working copy and try it out. We are confident that you will quickly see that the Tenant File is designed to be the most user friendly property management software on the market, yet is has the powerful features found only in products costing thousands of dollars.

If you have any questions, please don’t hesitate to give us a call at 1-800-398-3904. For the free demo or sample program and more information, visit our website at www.TenantFile.com. Thanks for joining us.

Paul Toller is a product support specialist with the Tenant File Property Management Software. He has written several articles property management, real estate rentals, landlord software and tenant lease creation.

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