Keeping Good Tenants: Renewing the Lease

By E-Renter Tenant Screening
Posted on November 2, 2009 under Landlord Paperwork and Forms, Landlord Tips | icon: commentBe the First to Comment

smiling-tenant-and-landlord on tenant screening blogKeeping rental units filled: it’s the number one job of any landlord or property manager. If you have tenants who want to renew their leases, then you are doing it well! Before you decide whether or not to allow a tenant to renew her lease, consider the pros and cons:

The pros:
1. There is no “break-in” period as with a new tenant;
2. Both sides know what is expected;
3. Current tenant is already agreeable to your terms;
4. No costly repairs, repainting, and advertising for a new tenant;
5. Landlord knows the tenant’s habits and behavior—so, no surprises;
6. Most important: no loss of rental income!

The cons:
1. You might be “stuck” with a less-than-ideal tenant for another year;
2. There are no guarantees that the tenant will continue to pay rent on time;
3. The tenant might become less diligent about following your rules;
4. Tenant’s job situation and/or income could change in between lease signing.

Even if you are not 100% enthusiastic about 100% of your tenants, those who pay their rent on time and cause little trouble are like gold—and never more so than in the soft rental market we’re in now. It’s usually in the best interests of both parties to renew the lease.

How to Renew Leases
Since rental agreements without renewal clauses expire automatically at the end of lease period, it’s a good idea to approach your tenant at least 60 days before that date. Ask what his intentions are, and offer to write another lease effective when the current one expires.

Research comparable rents in your area—if your rent is within the average range, you may not be able to raise the rent when the tenant renews. Inventories are very high in some areas, and tenants are more in control than in many years. Stay competitive to keep your tenants.

If you must raise the rent, offer an upgrade to your tenant: new carpeting, new paint, upgraded kitchen counters—whatever your rental unit needs. Now could be the time to invest in upgrades in order to keep the unit filled—and you could actually save money if you don’t have the expenses of turning over the rental unit to a new tenant—which could take months to find!

Renewing leases is much easier and cost-effective than finding new tenants—so keep the communication open with your tenants, find out what they want and try to accommodate them. Of course, if you have a problem renter, don’t let fear of the rental market or the economy keep you from finding a more solid tenant!

Add A Comment

You must be logged in to post a comment.