Did you get into real estate investing for the paperwork?
Probably not. Tracking the documents and the files and the receipts and the invoices can often seem like the least-interesting part of renting out a property.
Unfortunately, it’s absolutely critical.
You need the right paperwork and you need a strong rental agreement. Otherwise, you might find yourself in some trouble.
Here’s how property paperwork and strong renter agreements can protect you and your investment property.
Rental Agreements and Leasing
You’ve made it through the marketing and the showings and the tenant screening and now it’s time to sign a lease agreement.
Do you have one?
A good lease protects you and your investment. It eliminates the confusion that can happen when tenants don’t understand their responsibilities or your expectations.
You’ll need a rental application that’s legally compliant in Washington.
Without an approved lease that’s signed by both you and the tenants, you’re not going to have any legal backup when you try to enforce your rent collection, maintenance requirements, or other rules. Discuss the rental agreement in detail with your tenants, answer any questions, and sign it together before they move in.
With your lease agreement, you’ll also want all the addenda that may apply. This includes federal disclosures such as lead paint. It might include a pet policy or a smoking policy.
What other paperwork do you need during the leasing period?
- Application. Make sure your prospective tenants fill out every part of the application and make sure they sign it. Otherwise, you may not legally be able to check backgrounds and credit.
- Approval and denial correspondence. After you’ve completed your screening, you’ll need a form letter or some type of consistent communication that goes out to tenants who are approved and tenants who are denied. There are Fair Credit Reporting Act rules to follow when it comes to denying a tenant, so organization is incredibly important, otherwise you’ll face potential disputes and lawsuits.
You’ll want to provide a written set of standard rental criteria, too. Potential applicants need to know what you’re looking for before they apply.
Documenting Maintenance Protects Property Condition
It’s especially important to stay organized during your maintenance process. If you’re not sure when the HVAC system was last serviced, you might find yourself dealing with repair calls when the tenants try to turn on the heat.
Keep careful track of invoices, repair requests, warranties, maintenance invoices, and recommendations from your vendors and contractors.
An organized maintenance process will help you avoid liability. Be sure you’re documenting all repair requests that come in and repairs you make.
Financial Records Show What You Earn and Spend
Paperwork is always required when it comes to your money.
You need to have a solid accounting system in place that shows you what you’re earning and what you’re spending every month on your rental property. You’ll need this information at tax time to file accurate returns and you’ll also want to know where you stand financially so you can make smart decisions about your investment.
Having good financial records will protect you from unnecessary losses.
Don’t Forget the Property Management Agreement
If you’re working with a property management company, you’re likely less stressed about your documents, your paperwork, and your rental agreement. You have experts in place who are taking care of all these things for you.
Read your property management agreement and keep it close for when you need to refer to it.
We can help you get more organized. We can share additional tips and suggestions for documentation. Please contact us Real Estate Gladiators. We serve Monroe, Issaquah, Bellevue, Everett, Lake Stevens, Kirkland, and other cities in and around King and Snohomish counties in Washington State.