Whether you’re just getting started in the rental property business or have been around for a while, one of the most important things to consider over time is how often tenants will renew their leases. It’s important to have an actionable strategy from day one so that you can monitor what works best for your property and implement changes if necessary. Today, we’ll discuss five benefits of having a robust renewal strategy in place!
1. Consistency in Rent Collection
A major benefit of having a robust renewal strategy in place is that it will help you establish consistency and continuity when collecting rent. This works both ways, too. If your tenants know that they can expect to renew their lease at the same time each year, then this helps them plan for the future and budget accordingly. It also ensures that you’ll always have reliable income coming in from renters who are committed to paying on time.
2. Keeping the Good Tenants
Lease renewal strategies are mission-critical when you have fantastic renters you’d love to keep long-term. If you’re unprepared, your ideal tenants may move forward with looking elsewhere for their next lease. Consider implementing a communication strategy about lease renewals early on in your agreement. Start conversations about renewing several months before the end of the term, too.
3. Opportunities for Rent Increases
Lease renewals present reasonable times to make changes to your rent amounts. Not having a renewal strategy in place means you don’t likely have an organized plan to manage increases either. To avoid tenant turnover, consider merging these two together for best results. You’ll be able to implement increases in a timely and manageable way. And you’ll secure a lease renewal at the same time. If it doesn’t work out and your renters still opt to leave, you will at least be prepared to transition the property.
4. The Value of Lease Renewal Incentives
When you think about renewal incentives, it doesn’t have to mean deep rent reductions. Instead, consider it to be more about rewarding loyal tenants. Incentivizing lease renewals will also offer benefits and value for both sides. Any discounts or services you offer to renters who renew their leases will, of course, provide value to them. But retaining your renters through the terms of another lease agreement will also be cost-effective for you, a rental property owner. And not having to start all over again with finding new tenants could be rewarding enough for you.
5. Fewer Costs with Lease Renewals
When people aren’t moving out, you can avoid costly maintenance steps to prepare a property again for the market. Sure, you’ll have property maintenance to contend with during the lease agreement. But those overhauls and cleaning efforts that usually take place after someone moves out won’t be on your to-do list. And you’ll be dodging additional listing fees, marketing campaign expenses, and saving time by not having to show the property, as well.
6. Best Practices for Initiating a Lease Renewal
For best results, most landlords extend a lease renewal notice about 90 days prior to the lease expiration. Lease renewals can be sent by email, mail, or delivered in person and usually include current lease agreement details, renewal terms, and rent price points. Ideally, you will have a response within 30 days, allowing yourself enough time to make final determinations on what you need to do next. If your tenants decline to renew, you’ll at least be aware and have another 60 days or so to prepare for a potential vacancy.
If you need help improving your lease renewal strategy, contact us!
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