Having made the plunge into the ownership of multi-family real estate investments, you likely have found yourself with many questions.  Perhaps one point that you have been pondering is whether or not you should have a written lease agreement with your tenants.  Through this article, you are presented with the pros and cons of having a written lease agreement or merely having an oral rental agreement with your tenants.  In the end, this information will assist you in determining which course of action is best for you ... and your finances.

In this day and age there still are some landlords and multi-family property owners that prefer an oral agreement when it comes to renting property to tenants.  Of course, this simplifies matters as there is not addition paperwork involved.

With that said, there are limitations to what can be accomplished through an oral lease or rental agreement.  Most significant of all is the fact that an oral agreement for rental properties can only be for a term of month to month.  In other words, you cannot orally enter into a purported lease agreement for anything beyond a month to month term and still be in compliance with the law.

While an oral lease agreement is completely binding (within the limitations set forth a moment ago) you need to understand that because it is not in writing it can be harder to prove the terms and conditions of that lease agreement if there is ever a dispute between you and the tenant.

Written lease agreements really are is becoming the norm when it comes to people who own multi-family residential property for investment purposes.  First of all, with a written lease agreement you can have a lease term that extends beyond one month at a time - although you can have a written month to month lease agreement if you so desire and the laws allow in the state which you have invested. 

Second, with a written lease agreement, there will be less confusion about the terms and conditions of that agreement (in most cases and providing the agreement itself is well drafted).  You will not be as likely to experience disputes over the terms of the lease if those terms clearly are spelled out in the written lease agreement itself.

In the end, you will want to consider your own preferences and goals when it comes to selecting either an oral or a written lease agreement to utilize in regard to your multi-family real estate investment.

Richard Stephens