If you're a real estate investor in Memphis, then you may want to consider leasing out your properties to ensure long-term income.
However, one of the major challenges with leasing properties includes tenant relations and rent collection. You need to make sure that your lease agreement is followed at all times.
This is a process called lease administration, and it's crucial for long-term success in property management.
Here's how to succeed with good lease administration:
Understanding Lease Agreements
The first step is to understand the terms of a lease. As a property owner, you must understand the contractual obligations of both parties.
You want to make sure that your tenants are not violating their responsibilities. Since legal documents can be complex, this can easily be overlooked by the property owner.
If you're not careful, the tenant can get away with violating the agreement. Likewise, you also need to be careful that you don't unintentionally violate your end of an agreement.
To succeed with lease administration, you should also keep records of everything related to your properties. This ensures that you keep good tenant relations and can help with tenant satisfaction.
You should include records such as:
- Copies of the signed lease agreement
- Receipts of received payments
- Receipts for paid bills
- Paid invoices for services (electrical, plumbing, etc.)
These records are crucial in case you ever experience a tenant dispute. It also shows that you're a responsible landlord. It can possibly help you to attract future tenants in a tough market.
Rent collection not only involves receiving your rent on time but also keeping records of payments.
Before you sign an agreement with the tenant, discuss the options for paying rent. You should offer them at least two options for payment.
For example, you can offer a cash payment and bank transfer. Additionally, you can request the rent using payment apps such as Venmo, Zelle, or CashApp.
You should always keep a receipt of each payment received. If you get paid with cash, provide a signed receipt for you and your tenant. Take a picture of the receipt so you have a digital backup.
Make notes of any missed or late payments. These can also include late payments of bills or other related expenses.
If your tenants are responsible for their payments, you want to consider renewing their lease. It's often a challenge to find tenants who don't miss payments, so don't lose them if you've found them!
Succeed With Lease Administration
Now you know how to succeed with lease administration for your commercial properties.
You must first understand a lease agreement before presenting it to potential tenants. Make sure you understand the responsibilities of both parties.
You'll also have to keep records of everything related to your properties. This includes your rental payments, bills, invoices, etc.
Give your tenants a variety of options to pay their rent. If you have a great experience with your tenants, try to convince them to renew their lease.
Does this sound like a challenge? Reach out to us, PMI of Memphis, to help you with property management.