OC Apartment Brokers
If rental properties are just a hobby for you, please go troll YouTube instead of reading this article.
If, however, you do have an open mind to making extra money through moneymaking lease clauses, and want to grow your business, this might be the best article you read all day! Let’s get started!
1. Monthly Pets Fees
Allowing pets is one of my favorite strategies for making money. It puts you in a competitive advantage in the marketplace, particularly if nearby rentals don’t allow pets.
How much extra money can you make by allowing pets? In many markets, it’s reasonable to charge an extra $25-50 a month per pet. If you’re already getting premium rent, you might wish to make an exception and let up to two pets stay for a single pet fee.
While monthly pet fees are common, I don’t think it’s wise to charge a non-refundable pet deposit. “Deposits” by definition, are refundable. A “non-refundable deposit” is simply a fee – so stop confusing the tenant and just call it a one-time fee.
If you think pets aren’t worth the hassle, when you consider that you could potentially make an extra $480 per year per property in pet rent by allowing them, you might change your mind. Just be aware that pets might cause additional damage, so be sure to collect a security deposit, in the amount of 1-2 month’s rent, from the tenants.
EXAMPLE LEASE CLAUSE:
ADDITIONAL PET FEE. $50 x __ = $___ . Residents shall pay the foregoing amount as a one-time fee, which is non-refundable, in order to have the pet in the dwelling unit. This fee shall be in addition to any increase in the security deposit or the monthly rent, above.
2. Rent Storage Space
If you have a portable storage shed or a slightly weird barn (happened to me) on your property, you could try to sell it. But if you have no luck, consider renting it to your tenant. If it’s a large shed, an extra $30/month is probably reasonable. After all, professional facility storage units are typically more than $30/month.
Lack Of Room + Extra Storage 5 feet away = Easy Sell
This doesn’t even have to be a lease clause (although it can be). You can have your tenant sign a separate agreement for storage. While $30/month might not be a significant amount of money, it is worthwhile considering you did zero work to make this money!
EXAMPLE LEASE CLAUSE:
ADDITIONAL STORAGE FEE. $30. Residents shall pay the forgoing amount as an extra monthly fee above the aforementioned monthly rent to occupy the extra storage building on the stated premise.
3. Landscaping Fee
The industry standard for single family homes, is for the tenant to maintain the lawn and landscaping. When you’re going over the lease documents, describe the tenant’s landscaping duties.
And then wait for a response.
If they don’t say anything, ask them whether they have a lawnmower, weed eater, and other lawn maintenance tools.
They will probably give you a strange look – which is great.
Yard Responsibility + Lack Of Tools = Making Extra Money
Here is where you offer to take over the landscaping duties. You would then get somebody to cut the grass. If it costs you $30 a month, charge your tenant $40 a month – a profit of $10 for your management services. Keep in mind you pay nothing in the winter, but you still collect the extra $40 each month.
EXAMPLE LEASE CLAUSE:
LANDSCAPING/YARD CARE. Regular landscaping/yard care (mowing, edging, trimming, fertilizer, weed control) will be provided by Landlord for Earth-Friendly Landscaping for $40 per month. ___ Initial
For all Tenants:
- Tenant agrees to keep yards, walkways, patios and decks clear and to keep premises free of junk and debris.
- Tenant accepts liability for all landscape damage and/or replacement of such, if caused by neglect, abuse or lack of water.
- Tenant may plant the beds adjacent to their dwelling to their liking, but only with those plants that are of appropriate size and type for the beds. All plants brought or caused to be brought to the property by Tenant will be cared for by Tenant.
- Tenant agrees not to cut or prune trees, hedges and shrubs. This will be Landlord’s responsibility.
- Tenant agrees to properly dispose of all plant debris and agrees to not leave such on the property.
- Landlord will consider special Tenant requests for planting and removal of plants, shrubbery and trees, but reserves the right to determine the make-up of the landscaping.
For Tenants of single family homes only:
- Tenant agrees to mow, water, and keep the grass, lawn, flowers and shrubbery thereon in good order and condition, applying fertilizers and weed retardant as needed.
- If there is a failure of Tenant to keep the landscaping in good order and to follow these guidelines, Landlord reserves the right to hire a landscaping service at Tenant’s expense (after a 10-day notice to perform covenant).
- Landlord reserves the right to restore the landscaping to its initial condition, as it was at the time Tenant began occupancy, or if improved during Tenant’s occupancy, to the level of such improvement. Restoration will be at Tenant’s expense.
4. Subleasing
If you don’t outlaw subleasing, your tenants will do it when you’re not looking. Worse, you can’t penalize them for it without a clause in your lease.
I always prefer to allow subleasing, for a price. I give my tenants the option to sublease, but they have to pay a one-time fee. Further, the sublessee has to submit an application and is subject to my normal screening process and subsequent approval, only to eventually sign a subleasing agreement.
EXAMPLE LEASE CLAUSE:
ASSIGNMENT AND SUBLEASING. Tenant(s) shall not assign this Agreement, or sublet or grant any license to use the Premises or any part thereof without the prior written consent of Landlord. Consent by Landlord to one such assignment, subletting or license shall not be deemed to be a consent to any subsequent assignment, subletting or license. An assignment, subletting or license without the prior written consent of Landlord or an assignment or subletting by operation of law shall be absolutely null and void and shall, at Landlord’s option, terminate this Agreement and start the eviction process of all Tenant(s) and occupants.
If subletting is approved by the Landlord, a one-time fee of THREE HUNDRED DOLLARS ($300.00) PER SUBLET, is assigned to the lease. All subletting individuals are required to submit an application to the Landlord for evaluation and screening. Landlord reserves the right to reject any sublessee that does qualify. If any sublets are initiated by Tenant(s) without the prior written consent of the Landlord, for each individual sublet, Tenant(s) will be assigned and responsible for the subletting fee, for each sublet, spanning the entire term of this Agreement.
5. Early Termination Fee
It’s very likely that many tenants will want to terminate the lease early, and they can’t/won’t be bothered with trying to find a replacement. For them, paying an early termination fee is the most attractive option.
You should address this possible situation, and decide if you want to include a fee to terminate the lease. This buys them freedom from the lease so they can’t be held responsible for the remaining balance.
EXAMPLE LEASE CLAUSE:
EARLY TERMINATION. During the initial term of the Agreement, Tenant(s) shall have the option to terminate the remaining responsibility for rent due for the balance of the lease term by providing Landlord with written notice of not less than thirty (30) days together with payment of an early termination fee equal to TWO (2) MONTHS RENT. The Agreement will be considered terminated upon Landlord’s receipt of a proper written notice (signed by all Tenant(s)) and payment of the early termination fee and all rent and other charges due through the date of the Tenant(s) vacating the Premise. If Tenant(s) fails to timely vacate, pay the early termination fee, or pay any other charges due through date of vacating, the attempted early termination permitted by this provision shall be deemed void, and the other provisions of this Agreement shall apply.
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