Statistics reveal that lease renewals are hitting an all-time high! In the second quarter of 2020, 57.4% of renters were renewing a lease. Then in the third quarter of 2021, a new record was hit at a rate of 57.6% of renewals.
In the first quarter of 2022, the record rose again, with 58.3% of renters agreeing to lease renewals.
If you are a landlord with a good tenant, you want them to stay. However, it is important to go about renewing a lease agreement the right way. Here are the important details.
Considerations For Renewing a Lease
Finding tenants takes time, so you may find renewing with your current tenant easier. However, it is important that you only continue a lease with a tenant who takes care of your property, pays on time, and is respectful to their neighbors.
Otherwise, you may be allowing a less-than-perfect tenant who creates damage and can’t pay the rent on time to continue living on your property. This will only cause you to stress more than if you were to look for a new tenant.
Should You Increase Rent?
The next consideration is if you should increase the rent. Keep in mind that this could affect whether a tenant will stay. You may need to offset your annual expenses, which could mean losing your tenant.
If you are increasing the rent, you must provide a notice of rent increase. You should notify your tenant of the increase before offering a lease renewal. This gives the current tenant the information they need to decide whether to renew with you.
When to Offer the Rental Lease Renewal
You should give your tenant an offer to renew the lease agreement 90 days before the current one expires. To offer lease renewals, you can do this via email, sending a letter, or in person.
Your goal with offering it in advance is to get a reply from the tenant in 30 days. This way, you have 60 days minimum to search for a new tenant if needed.
How to Make the Offer
Digital delivery, including emails, are the most efficient form of communication. In your message, you must have all the details. Include the current lease’s expiration date and what the terms of renewal will be. Finally, include the renewal rental price.
Some tenants want to stay, but only for a smaller period than an annual lease. A tenant may request the renewal to be month-to-month. Therefore, the lease will continue, but on a month-to-month basis.
In these types of leases, either you, the landlord, or the renter could end the lease. It could terminate at any time if there is sufficient notice.
The renewal lease must state how many days' notice must be given. For instance, many month-to-month leases are 30-day notice.
Even a month-to-month renewal must have a signed lease agreement by both parties.
What to Know About Lease Renewals
It is easier, and costs less, to keep a good tenant than to find a new one. If you want the tenant to stay, you want to keep them happy. This means knowing how to execute lease renewals in a manner that is professional and protects your rights as the landlord.
The experts at Allegiant Management Group have been helping Kissimmee landlords like you renew leases and keep tenants thrilled at the prospect of staying as your tenant. They offer a full range of services in property management and can design a program with your goals in mind.
Choose property managers with the experience and resources to make you a successful real estate investor. Contact Allegiant Management Group today!