How to Get Through the Lease Renewal Process
Having good tenants who take care of the property and pay rent on time makes your life as a landlord much easier. These are the renters you want to keep for as long as possible. Don’t let lease renewal surprise you or stress you out. Make a plan to get the lease renewed, execute it, and follow through - all while remembering that your best tenants often want to stay right where they are.
Research Local Rent Prices and Values
Most tenants expect some kind of rent increase, especially if they’ve lived in the home for at least a year or longer. Before the lease is ready to renew, start doing your research on rental values in the area. In most cases, they’ve gone up. Is it enough to justify a price increase? If so, make sure you don’t price your tenants out of the property, if you’d like to keep them. Raise their rent enough to keep your property competitive but not so much that the house sits empty for a few months while you look for a new renter.
On the rare occasion that rental values decrease, don’t lower the rent unless there’s a compelling reason to do so. But you still need to be competitive in your market. Make sure you’re offering value for the price you’re asking. Consider adding new amenities like a security system or upgrading the kitchen or bathrooms. Tenants will pay more if they’re getting something for their money.
Write the Renewal Letter
Check the terms of the lease agreement to know exactly when the lease expires. You’ll also want to make sure you know when you or the tenant have to give notification whether the lease will be renewed or not. Put together a lease renewal letter, with a new lease agreement if necessary, outlining the length of new lease, the new monthly rent, and any deadlines.
If you’re making any other changes to the lease agreement, make those clear in the renewal letter as well. What kind of changes can you make?
● New pet policy
● Upcoming upgrades
● Lawn maintenance
● New or reduced fees
● AirBnB policy
Telling your tenant’s what you’re changing gives them the opportunity to decide if they want to stay or go. Sending the letter early enough - 60 - 90 days before the lease renews - gives you time to prepare for a vacancy or the renewal.
Follow Up with Your Tenant
Life gets busy for all of us, and your tenant may tell themselves they’ll go over the lease renewal and forget. Include an offer to meet with your tenant in the lease renewal letter. At least 30 days before the lease ends, follow-up with the tenant. Give them a call and set a time to come by or meet somewhere.
It’s possible they’ve just forgotten to call you. They may also have questions they’re hesitating to ask. This is your opportunity to answer questions, negotiate any points that might help keep the tenant, and possibly walk away with a signed lease renewal. Just as you do during the tenancy, keep the lines of communication open during the renewal process. Doing so will help keep good tenants happy and make your lease renewal process go as smoothly as possible.
If the lease renewal process sounds like a lot of work, it can be, especially if you’re making changes or have multiple properties. Make your life easier and feel confident you’re keeping the best tenants at the best rental rates by working with a property management company. Here at ERA American Real Estate, we understand the rental market along the Emerald Coast, know how to craft lease renewals and agreements, and want to help you keep good tenants. Give us a call today so you don’t have to go through the lease renewal process alone.