Leases and rental agreements are part and parcel of a landlord’s job, which means you’ve got to know their ins and outs. You’ve already managed to get your first batch of leases signed — that’s fantastic. Now the lease term is almost up and it’s time to start thinking about renewals. What do you need to know?
In an ideal world, you should be aiming to find reliable tenants who pay on time that you can keep in a rental for multiple lease terms. A bird in the hand is worth two in the bush, as the saying goes. It’s always better for you to have good, paying tenants in your properties than bringing in new renters every term and hoping for the best. We’ve written before about the best ways to avoid high tenant turnover so you can make sure to keep your best renters around for years to come, and we highly recommend you review those points.
Know the Pros and Cons of Renewing Rental Agreements
Renewing rental agreements rather than finding new tenants every term prevents you from having to go through a great deal of busywork and opening yourself up to potentially lost revenue. Repeat renters don’t require marketing dollars, online rental listings, showings, or following up on new leads. They’re already there, making your job much easier.
However, there are some cases when offering a rental renewal may not be in your best interest. We’ve been talking about good tenants, but if you’ve had a problem tenant that hasn’t been great about caring for the property or paying rent on time, you may fair better by letting them go and using the proper tenant screening services to find a better fit. You don’t have to offer lease renewals, so it’s a good idea to consider your options.
When you decide to renew a lease, you should give your tenant plenty of notice. Remind them at least 60-90 days out that their lease will be expiring and give them a deadline to let you know whether they intend to renew. Give yourself plenty of time to find a new tenant if you need to. Entice your current tenants to stay by maintaining their current rent or offering a slight discount for staying. If you choose to raise your rent, you risk pricing out good tenants, so consider any price hikes carefully and only raise your costs when the market reflects those rates if you can.
You may also choose to offer people the option of going month-to-month if they’re not ready to commit to a six-month or year-long lease. When you allow month-to-month, either you or the renter can end the lease at any point as long as you serve appropriate notice, which is usually 30 days. It’s both more flexible and more risky for maintaining a filled unit. However, some tenants may appreciate that flexibility, and it allows you to make sure a unit is temporarily filled while you search out a new tenant, ensuring you don’t lose that rental payment.
All in all, there are many excellent reasons to renew, and we hope you’ll consider all your options. We recommend our RentalConnect program as an added tool for selection the right tenants for your property if necessary. RentalConnect offers property owners and landlords a great alternative to the expense of full tenant screening. This service requires no on-site visit, sign-up, or membership fees, making it extra convenient. The $34.95 service fee is paid by the applicant. Available 24/7, RentalConnect is fast, easy, secure, and delivers reports needed to make an informed decision, including a credit report, a national criminal search, and a national eviction search. Reach out to us for more details!
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