David G. Brown - HOW TO REDUCE YOUR RISK IN REAL ESTATE INVESTING

10. Pets

Along with smoking, pets can be a major area of contention. This is another area where you need to be careful and specific about your rules. If you don’t allow any pets under any circumstances, then be sure that’s clearly spelled out in your lease. Some rental property owners find this is the way to go, just to simplify things. However, there are plenty of pet owners looking for a place to rent, and some owners prefer to open up their “base” of tenant applicants by allowing certain types of pets under certain types of rules. If you do decide to allow pets, include a pet deposit, and determine how much this will be and whether it’s refundable. You’ll also need to include penalties in the lease penalties for either a) property damage done by a tenant’s pet(s); or b) tenants sneaking in pets if you have a strict no-pet policy. Ask your attorney about your rights to seek reimbursement if a tenant’s pet causes damage to your property.

11. Use of Premises

Carefully spell out the use of your premises. Some examples are outlined below. • Residential. Is the property for residential purposes only? This might seem like a no-brainer, but times have changed, and more and more people are working from home, whether operating their own businesses, telecommuting, freelancing, etc. You will have to determine precisely what you will and won’t allow, such as running businesses, allowing customers/clients into your home, and guaranteeing quality of phone and Internet. For example, a tenant can’t file a formal complaint about poor Internet access for their business if

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