Investing in properties can be profitable for individuals who apply the right strategies. One thing that's essential to incorporate as a core strategy is a lease renewal process. If you stay on top of keeping your leases renewed and building relationships with long-term tenants, you'll generate better ROIs.
You may have several questions about how and when to renew the lease. Our property management team is here to guide you through everything you need to know for a profitable lease renewal strategy.
When Should Property Owners Offer to Renew the Lease?
Timing is vital for investors who want to renew a lease with an excellent resident. If you do it too early, the tenant might be put off by it or procrastinate doing it. However, if you wait too long, it may be too late, and they've found another place.
An experienced Delaware County property management company will recommend starting the renewal process at least 90 days before the existing lease ends. This gives renters plenty of notice that their lease will end soon. It also helps you keep those solid tenants that are consistent in paying their rent on time and taking care of the property.
When you work with a property manager, they'll keep track of the timing and send the appropriate notices to renters that are ideal for renewal.
Why Are Lease Renewals a Smart Idea?
Rolling over your properties to the same tenant through lease renewals is wise for various reasons. First, if you have a good tenant, it's smart to keep someone who follows the rules, pays rent on time, and doesn't cause damage to your property. Finding a good tenant is not always easy, and you might end up with someone worse if a good renter doesn't renew.
Second, excellent tenants help your ROI stay on track. When a tenant leaves your property, there is significant work you must complete to find a new renter. From the make-ready process to marketing the property and showing it, you'll have your hands full.
In addition, it may take a few months to fill the vacancy if a tenant doesn't renew their lease. So every month that goes by is another month without that income you rely on.
Another benefit of giving a lease renewal notice to tenant residents early is it provides an opportunity to let a resident know you're raising the rental income. In most cases, tenants expect a modest increase in rent due to the increase in the cost of living. Raising the rent a reasonable amount helps you improve ROIs.
How Does the Lease Renewal Process Work?
It's simple to get started on a lease renewal. Follow these basic steps to ensure a smooth process:
- Review the current lease
- Check for any updates that need to be made (rent increase, new rules, etc.)
- Send a letter to the tenants advising them about the lease renewal option
- Be sure to send the lease renewal letter 90 days before the lease terminates
When you write the lease renewal notice, be sure to attach a letter with it that thanks your tenant for being a good resident. Explain what the new rent is and why it is increasing (cost of living, increased cost of goods or maintenance services, etc.). Then, close the letter by encouraging them to send it back within the next 30-60 days.
This timeframe allows them plenty of time to contact you with any questions they may have about the lease. It also gives them time to thoroughly review the lease without feeling pressured at the last minute to sign.
Do I Have to Renew a Lease?
In some instances, you may not want to renew a tenant. For example, maybe the tenant was troublesome, didn't pay their rent consistently, or otherwise caused issues. In these cases, you are not obliged to renew their lease.
The end of the lease term is the ideal time to eliminate difficult tenants from your properties. That way, you don't have to go through the eviction process or need a reason to remove them.
However, it's crucial to be civil about notifying a resident that you're not going to renew. Send them a polite letter 90 days before the lease terminates. Advise them of the date when the lease expires and tell them you will not be offering a new one.
Even if your tenant is not difficult, you may have other reasons you don't want to renew. For example, your property may require extensive upgrades, and you find that the end of the current lease term is the ideal time to do it.
Other investors may want to sell their property when the existing lease ends. Whatever the case is, rental property owners have the option not to renew the lease.
A Delaware County Property Management Company Handles Lease Renewals
If you're struggling to keep up with renewals or missing out on good tenants that leave when their lease ends, it's time to work with a Delaware County property management company! The experts at Rentwell have established processes to help you keep your best renters through a well-time renewal process. Our online portal and management system make the entire lease renewal process efficient for everyone so property owners experience better returns.
With excellent resident management, you'll build better relationships with tenants and improve tenant retention. Reach out to learn more about our property management services, including leasing and renewals.