You should always have a rental agreement signed by each renter for all of your properties. Don’t make the mistake of just doing a verbal agreement. It could cost you dearly. Even if one tenant works out well without everything in writing, it takes only one gone awry to mess everything up.
It’s especially important for shared renters. Shared renters when multiple people live in a house and they all contribute to the rent payments. This doesn’t include families or households. This would be like a group of college guys who want to share a house or condo. If each guy is paying a share of the rent, than this is a shared rental situation.
In this scenario, you need to get a written agreement signed be each person, not just one. Even if they are good friends, you need to get individual signatures.
You should also add an addendum that clearly states the others will cover the entirety of the rent should one or more of them fail to pay. This will help everyone keep accountable to pay their portion of the rent on time.
You should put this addendum on a separate section of the agreement and have each person sign their initials to show that they read and understood that section. So if one renter leaves unexpectedly or can’t come up with the payment, the others are held responsible. This is one way to make sure you get your payment from everyone.
Managing investment properties can be a headache to begin with. You should try to make things as easy for yourself as possible. You want to decrease the amount of potential complications and you want to hold your tenants as responsible for their actions as you can. You are their landlord not their babysitter. You own the house and they pay you to stay there. Keep it that simple.
That’s not to say that you should be a ruthless landlord either. In economic hard times as we are facing now, many people have legitimate difficulties in paying their rent. You should show some compassion. But you should also have a recourse should you need to use it.
Property investing is not like investing in the stock market. It comes with a lot of baggage that you need to be ready to handle. You’re not just dealing with numbers, you are dealing with people.
