16 Jul Lease Renewals
Lease renewals are a great way to eliminate the cost of finding new tenants. And, every landlord knows that keeping quality tenants is not only good for your bottom line, but also for your level of stress. That’s because finding new tenants can take a toll on you. From painting and cleaning to marketing and screening tenants, there is a lot one must do to get a property rent ready. Remember, turning a rental property and replacing tenants takes a significant amount of time and money to complete the task.
Although total turn costs are ultimately dictated by the state of your rental property, the age, market comps, and rental demand, it can cost you upwards of $2,500. And, that is if you didn’t procrastinate on your annual maintenance and regular repairs. The turnover process is in fact the most expensive part of rental property ownership. So, it only makes sense to consider how lease renewals can lessen the impact of both time and stress spent on finding new tenants. With this in mind, here is what you need to consider before renewing your lease.
Renew or Re-list
The goal of any lease renewal is to keep good tenants who pay the rent on time and take care of the rental property. Only consider renewing a lease with good tenants. If you have tenants who pay their rent on time, do not disturb the neighbors, and communicate well with you, it is worth your while to keep them around. Conversely, if you have a tenant who always pays their rent late, it may not make sense to keep them. That’s because collecting late rent payments can be even more costly than finding new tenants.
At the end of a lease, you have a decision to make, renew, or re-list. Remember, finding a new tenant can be a time consuming and costly process. And, the longer it takes to find a new tenant, the more expensive the process becomes. For this reason, it is important to consider whether or not renewing a lease is in your best interest. Below we have listed some reasons to renew or re-list.
- Eliminates the cost of finding new tenants
- Reduces the risk of vacancy
- Saves time
- Reduces your risk of having a bad tenant move-in
How to Renew a Lease
While some states require you to follow guidelines about lease renewal timeframes, make the process proactive. That being said, we recommend offering your tenants a lease renewal 90 days before their lease expires. Make sure to create a new lease with appropriate changes to the rent and lease terms (as appropriate). For example, things like a rent increase, new pet policies; repairs to be made and insurance requirements are changes that should be included on the new lease.
Lease renewals are a great opportunity to save time and money. That’s because instead of spending money and energy finding a new tenant, you simply sign a new lease and you’re done. A few things to remember, ask your tenant if they want to renew their lease 90 days before it expires, and make them aware of any changes to the contract.
Keep in mind, there are many aspects to the lease renewal process. On paper, it may seem easy, but there is a lot of communication one must go through to try to get a tenant to renew their lease. For any landlord who is struggling with this process, you might want to consider hiring a property management company to do the work for you. Contact us today at (858) 576-2176 to learn more about our property management services.