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How to Save Thousands of Dollars with One Simple Clause in Your Lease

By Michel Lautensack

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Can you force the tenants to get a renter's insurance policy?

Well, yes and no. You don't need to force them. What you must do though is have it in your lease. Whether they comply with getting insurance is their call. But if it's in your lease and let's say the upstairs unit overflows the tub and the water comes down the wall and goes on their $1,000 big screen TV and they come to you and say, "I want you to replace my big screen TV," and you say, "Well, do you have renters insurance?"

They say, "No, we don't have it."

"Well, I'm sorry. It's required under your lease and you're required to have personal property insurance, and if something breaks you're required to go to them for reimbursement not to the landlord."

If you do that properly, and our lease already has that document and that paragraph in there, that will protect you in most circumstances. Now if you do something fraudulent and you knew the upstairs toilet was overflowing and you did nothing about it, they had called you 14 times, it might be a little bit gray, but as long as you're acting professionally and you're acting diligently and it was a true accident and you weren't aware of it, you certainly will be covered with that clause in your lease. That was a great question.

These are little tidbits. It's that little tidbit that could save you thousands of dollars. I guarantee you most real estate investors don't have that clause in their lease.

I just had a flood in one of my rentals and some of my tenant's belongings were destroyed. I do have that clause. I asked him if he had gotten insurance. He said no and "Well, that's the reason for insurance," and he didn't say another word.

Well obviously you're an experienced, professional real estate investor. I know your background so I know you're in that 5 or 10% group. It would make sense. That's clearly an example of how it can save you an enormous amount of money.

I was just buttressing your point and an extremely good one.

So again, we'll go through that. One of the advantages of this course is you're going to get my lease in Word format and obviously you'll change the name and some other things, but you can take my lease and just run with it.

First of all, trying to take a lease and recreate it is a lot of time and effort. There are a lot of addendums that you would have to go out and research. First of all, if you didn't know what they were, you'd have to go track them down and things like that, but we've done all that work for you so you're going to take the lease.

You're going to go in there and you're going to change the name of your company and phone number and contact information and you're ready to go. I mean, you've got a very high quality lease.

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