The housing market is on a high right now, with many landlords taking home higher profits than they might have even imagined when they first started investing. If you've found yourself in this boat as well, it's important that you take the time to learn a lot about lease renewals.
Ensuring the renewal process with your current tenants runs smoothly will be essential in maintaining the level of passive income you're currently experiencing. If you lose your tenants, you'll lose the income and be forced to spend time and money finding new ones.
How can you make sure your lease agreement renewal goes smoothly? Read on, and we'll walk you through the basics.
Benefits of a Lease Renewal
Why, as a landlord, might you be eager to renew a lease with your tenants?
If you have great tenants in your space at this moment, it allows you to hold onto them. Not all tenants pay on time and treat a space with respect, so if you have tenants that do, you'll certainly want to encourage them to stay.
The tenants in your space are also already familiar with your lease, the space, and all your rules and requirements. It will be much easier to have them stay as opposed to having to re-educate a new group of potential tenants.
Keeping an existing tenant lease in your space also reduces the risk of costly turnover. You won't have to deal with a vacancy in the space, which will be generating no income for you.
Lease Renewal Process
If you're planning on offering lease renewal to your current tenant, how can you go about this process? It can be simple enough.
First, you'll need to determine the lease renewal period. This is the window of time between the tenants being notified of their option to renew and the deadline of their ultimate decision. Generally speaking, a ninety-day window is considered acceptable for this kind of process.
In most cases, you'll want to send a clear and professional lease renewal letter to your tenant. This letter should contain information about this window, the renewal itself, and the time period of the new lease would be.
If you're working with a property management group, they can likely craft this letter on your behalf. They can also draw up a new version of the existing lease and adjust the areas that need adjusting.
Rent increases and other such changes will need to be included in this new lease. Once the tenants accept the lease, both parties will sign, and you'll have successfully ushered your tenants in for another year.
Understanding Lease Renewals
If you rent an apartment or home anywhere in the country, it's essential you get familiar with lease renewals. The above information will cover everything that you need to know about renewals and how this overall process works.
Have more questions about properly executing a lease renewal? Need assistance? Give us a call anytime for help.