In today’s highly competitive rental property market, the process of lease renewal can help create a more stable passive income by ensuring reliable tenants and reducing significant maintenance and marketing costs. Taking a proactive approach to renewing leases is the most effective way to reduce tenant turnover and the ensuing vacancy—and associated stress—that can follow.
Below is a guide to help you through the lease renewal process, along with answers to some of the more commonly asked questions:
2023 Lease Renewal Guide:
Lease renewal is the process by which a tenant decides to extend their lease to live on your property, or else lets the lease expire in order to find a new place to reside. As the landlord, you should begin this process early, at least 90 days prior to the rental contract expiring, by either drafting a brand-new lease with different terms, or extending the terms that were outlined in the original lease.
The goal is to receive an answer within 30 days, giving you two months to find a replacement tenant. The lease renewal can be sent electronically via email, in the form of a mailed letter, or delivered by hand. In any case, the contract will need to be signed by both parties for the renewed lease to be binding. Now let’s take a look at some of the more frequently asked questions regarding the lease renewal process:
What are the Benefits of Renewing Leases?
Put most simply, renewing your tenant leases early will help you retain responsible tenants who take care of your property and pay the rent on time! Not only that, but you’ll also be saving both time and money while avoiding the stress of re-listing the property, making aesthetic repairs, screening potential tenants, and creating a new lease agreement.
Pro Tip: Only offer a lease renewal to those responsible tenants noted above. Tenants who have issues paying the rent or who’ve damaged your property are better left to explore other options.
Is the Lease Renewal Process Time Consuming?
Not really! All that’s required in the lease renewal process is drafting a new rental agreement and sending it out, which is much less time-consuming than advertising your rental listing, showing the property, conducting background checks, and creating a lease agreement from scratch.
Can I Raise Rental Rates During Lease Renewals?
Yes, the process of renewing leases is the perfect opportunity to make sure your rental rates keep up with comparable market rates. It’s important to keep in mind, however, that raising the rent too much could cause good tenants to seek a different housing option. Typically, a 3% to 5% increase in rental rates is enough to offset costs, keep the property competitive on the rental market, and still retain tenants.
Are There Incentives I Can Offer to Increase Lease Renewals?
There are plenty of ways to encourage responsible tenants to sign a lease renewal. For instance:
- Include a gift card with rent renewal notice
- Utilize a rent credit
- Offer a new appliance, fixture or fresh paint
- Host a resident event
- Incorporate smart access to property
Do I Need Proof of Income to Renew Apartment Lease?
It’s entirely dependent on the requirements of whichever state your rental is in. Some states, for instance, require that any affordable housing unit be rented by someone making below a certain income level, which of course requires documentation. Make sure that you fully understand the legal parameters that outline the landlord-tenant relationship in the state where your rental property is located.
Should I Do a Lease Renewal Walk Through?
Absolutely! Before deciding whether you want to renew your property with a tenant for another year, it’s important that you do a proper walk through of the rental property prior to signing a binding contract.
Should I Hire a Property Management Company to Handle Lease Renewals?
It depends on how much time and energy you can put into this essential process. While lease renewal is, at its core, quite simple, it does require the implementation of a seamless process. Many landlords in the Greensboro area, for example, choose to let someone like SLT Properties, considered one of the leading property management companies in the Triad region, help them stay legal, efficient, and on top of all the renewal deadlines.
If you’d like more information about how SLT Properties can help you with the lease renewal process, or just want to check out our available rental properties and rates, visit our homepage today!