In the rental property management business, an excellent tenant is almost worth their weight in gold. Lease renewal offers sent out in advance can help to ensure that you keep these valuable tenants in your Norfolk rental property.
Let's dive into why lease renewals are a good idea and how and when you should send a lease renewal notice to tenants.
By renewing a lease, you can keep good tenants who respect your property and pay their rent on time.
To find new tenants you must first market your rental property, which could take a few weeks (or longer). You then need to screen the potential candidates. Once you have found the ideal tenant, it is time to draw up a new lease agreement. This can add up to be a costly and time-consuming exercise.
Offering a lease renewal to your current tenants requires considerably less time, effort, and expense. Therefore, keeping good tenants beyond their initial lease term is advantageous for your return on investment (ROI).
Other advantages of lease renewals include:
In addition, it is often appropriate to apply a reasonable rent increase when renewing a lease agreement. To offset increased expenses, most landlords need to raise their rent each year.
However, property owners don't want to risk losing tenants by raising their rent too high. A Norfolk property manager can assist you with keeping your good tenants during the renewal process by setting fair rental fees.
About three months before a lease is due to expire, review the lease. Evaluate the rental fee. Make updates to the rental agreement if needed.
Then, send your tenants a lease renewal letter ninety days before their current lease expires. Offer the lease renewal via email or another digital delivery method. Details to include in the lease renewal letter include:
Remember to thank your tenants for taking good care of your property. Give the renters a deadline for responding to the lease renewal letter. Thirty to sixty days is fair. This timeframe gives you sufficient time to advertise the rental property should they decide not to renew the lease.
If the tenants are eager to renew their lease, send them the new lease agreement. Allow sufficient time for them to review the document, ask questions, and make a final decision.
A lease renewal agreement or residential lease extension is a legal document between a tenant and a landlord that extends the tenant’s duration of stay in a rental property.
A property owner should offer lease renewal notice to tenants ninety days before the lease is due to expire. This gives the tenant time to consider whether they want to renew the lease given the new lease terms. Should the current renters choose not to renew, it also gives a rental property owners time to market the unit and secure new tenants to move in once the present lease expires.
If you and your renter wish to extend the lease agreement, you might need to decide between a fixed-term and a month-to-month lease renewal.
A fixed-term lease renewal extends for a specific length of time. In this case, the renters commit to leasing the property for another six months, twelve months, or even two years.
However, a month-to-month lease renewal means that the lease continues on a monthly basis. In other words, either party can end this lease at any time with sufficient notice, usually thirty days.
With a fixed-term lease at renewal, both parties have more security. Renters know they have a home for the duration of the lease agreement, and you have consistent monthly income.
A month-to-month lease renewal provides flexibility to both the property owner and tenant. However, it also leaves both parties only thirty days or less to make alternative arrangements should one or the other submit notice to terminate the agreement.
With month-to-month lease renewals, landlords can often charge higher rent amounts to compensate for the greater risk of the reduced notice period.
No! Several instances would make a landlord reluctant to offer a lease renewal.
If you are ready for unsatisfactory tenants to leave, the end of an existing lease is an opportune time to make that happen without having to go through the eviction process. Ninety days before the lease ends, send a letter to your tenants to inform them that you are not offering a renewal. Remind them of the lease expiration date.
An online portal and management system can make the lease renewal process simple and easy. Receive reminders about an upcoming lease renewal at least ninety days before a lease expires. You can also schedule reminders for mid-term property checks and regular maintenance.
The best Norfolk property management company incorporates management systems that also make it easier for tenants to log maintenance requests and pay rent, amongst other time-saving benefits.
Low tenant turnover and reduced vacancy rates maximize the profitability of your rental property investment. Improving tenant retention starts with excellent resident management, efficient and effective maintenance, and building good landlord-tenant relationships.
If you are unsure of how much to raise the rent or how to start the renewal process, a Norfolk property management company can help! Osprey Property Management is here to help you stay on top of renewals and improve tenant retention.
Download the "How to Create a Custom Lease Agreement" checklist to create airtight leases!