This summer, lease renewals hit an all-time high. With inflation and higher mortgage rates, more tenants would rather wait to purchase a home. If you're a new landlord, you're at an advantage. Not only will you lock in more tenants, but your tenants will last longer, saving you time and money.
Before you get excited, you must understand lease renewals and when you need to lock in tenants. This way, you can make the lease renewal process as smooth as possible. Here's everything you need to know about the lease renewal process, the legal requirements, and some tips that will help you out.
What Are Lease Renewals?
A lease renewal is a contract that a tenant signs, agreeing to extend their lease and continue living in your property. Most landlords will set the lease date at one year, though there are short-term leases that may only last a few months. Most landlords give their tenants several months (at least three months) to renew a lease. This allows enough time for a tenant to buy a home or find a new rental property.
Importance of Lease Renewals in Real Estate Investing
There are legal and moral reasons to offer lease renewals. Some of these reasons will also benefit you as a property owner. Here are some of the most critical points.
Avoid Turnover Costs
Finding a new tenant is more expensive than you think. Landlords must advertise vacancies, run background and credit checks, and hire a cleaning crew. All these fees add up, so you save money if you maintain good relations with existing tenants. A good way to spoil a relationship is by not offering a lease renewal in a timely manner, which may result in a tenant looking for new rental properties.
Steady Source of Income
In addition to saving money, you'll continue earning money for the following year. You'll have a more stable property investing business, locking in passive income. This can also give you an excuse to invest in more property
or improve an existing property to generate more income.
Lease Renewal Process
You can deliver your lease renewal in a few ways:
- Digital contract via email
- Physical contract mailed to the tenant
- Scheduled appointment
Your contract should include essential information, such as:
- The tenant's legal names
- Names of others on the lease
- Your property's address
- Lease length of time
- Lease start and expiry dates
- New rental price and other conditions, if applicable
- Landlord and property manager contact details
Your lease should provide specific instructions. For example, require your tenant to sign the contract if they wish to extend their lease. You should also state what your tenant must do if they want to break the lease early.
Start Your Lease Renewals Today
Lease renewals can be a challenge for new landlords to understand. Don't worry, we're here to help. Our property management company is experienced in dealing with all matters of residential management, such as tenant screening, marketing your property, and rent collection. Contact us today to get started.