Lease renewals are a vital part of the business if you specialize in property management or you are an owner of residential properties. Knowing how to deal with them and some issues that can affect them are important to think about because it’s something that most don’t deal with regularly.
Whether you are an owner, manager or the renter, here are several tips to make everyone’s life easier when it comes time for the paperwork.
Don’t procrastinate, start the renewal process early.
If you have tenants whose leases are up soon, don’t wait a few weeks out to begin the process. The first step is to contact them, preferably 2 months out, to see if they even wish to resign their lease.
Doing this will give you time for any specific problems or issues with the property, or management of it, to arise. This also gives you time to address their needs and reassure them that the property will still be available to them.
Make it simple to renew their lease.
When you check in with them regarding renewal, provide them the new lease at the same time. Often there are no issues or conversation even needed, they are ready to sign immediately and so are you, so make it easy for them. You can email them a copy or drop it off, but ideally you have a digital lease in place with something like DocuSign. In the modern age most people are familiar and comfortable with signing documents online and actually would prefer it. It saves them the hassle of finding time to set up an appointment with you, coming to the office, or mailing a copy back.
Communication is a two-way street.
You want your other half of the lease to keep you informed. As a tenant you should let the owner know a few months out on your plans. This is a courtesy that will put you on their good side as well as expedite your plans of resigning the lease if you choose to do so. As the owner, let your tenants know about any changes or improvements you plan on making. Even minor things being done should be told to the tenant, and they will in turn feel important as a renter. Someone who feels valuable will be more likely to stay.
As the owner you get to decide the rent for the apartment or home you are leasing. If you want a little more money than you can choose to raise the rent, but be careful doing so. If the tenant pays their rent on time and has taken good care of the property, be sure the market value is high enough to justify a rent increase. On one hand, do not shy away from a small increase every year 3-5% increase every year, better to raise it small amounts than one large increase 5 years down the road. A property management company will be able to advise if this is a good time to raise the rent and by how much. Just as an example, say rent costs $1700 a month. You want to raise it to $1750. That’s a 3% increase which isn’t much. That will typically be acceptable to a tenant depending on the market. You will get an extra $600 per year in rent. However if they decide to leave and the apartment sits vacant for a month, you are out that $1700 plus marketing expenses. You lose money and have to spend the time to find a replacement. Determine if raising rent will wind up hurting you more than helping. Depending on the market, you may just raise it $25 in this situation.
If you are going to raise rent higher than 3-5%, have a good reason. Maybe you gave them a major upgrade such as new appliances or central air. Demonstrate competitive market value with other listings. Always remember they can and will leave after their lease if you push too hard.
Be open to what you did or didn’t like
As the renter, talk to your landlord about the issues you may have had with the property or property management company. Maybe repairs took too long to get done or the neighbor was too loud continually and they never seemed to make them quiet down. Maybe there is an upgrade that you’re wishing for. Talking to them early about these items can help you both to remain happy and find resolutions and agree upon what you want for the property and your rental amount. Simply expressing your needs goes a long way in achieving what you want.
If you are the owner, and you have a couple of issues with the tenant, do share them in a polite constructive manner. If they were late too often, you may suggest a stricter late policy. Or perhaps you are concerned that they do not keep the property clean. Sharing positives as well is helpful. If they are receptive to what you say and change what they are doing, you’ll be happy they renewed the lease and you can continue to collect rent from them.
When it comes to the end of a leases, both parties need to be open and speak about their plans, problems and what they desire to happen in the near future. Being open like this and straight forward will save not only the tenant but also the owner valuable time and money. Resigning a lease is a big part of the renting business for the owner, so they should take extra steps to make the best possible outcome come to fruition for both them and the renters.