Understanding Lease Renewals from a Property Management Perspective

Lease renewals are an important part of property management that can affect occupancy rates, rental income, and long-term investment performance. Needless to say, you need to have a strategy surrounding lease renewals and seriously stick to it. One of the best ways to navigate lease renewals is with professional property management assistance. The right company will be able to provide you with insight and action that is beneficial not only for you, but for your tenants as well. They can also assist in evaluating market conditions, tenant history, and achieving your long-term goals.

In this blog, we will walk through the ins-and-outs of lease renewals from a property manager’s perspective. Why do they matter? What do they entail? How do you approach them? Let’s discuss.

Why Lease Rentals Matter for Rental Property Owners

Firstly, why do lease renewals matter? Well, in short, they save property owners a lot of time, stress, and extra work.

Lease renewals help you eliminate the cost of finding a new tenant. No matter the length of your tenant’s lease, you need to ask them in advance if they plan on renewing or not. This gives you time to prepare for cleaning, repairs, marketing, and any necessary turnover work. Not even taking account your personal time as the property owner, tenant turnovers can cost anywhere between $1,000 and $5,000 depending on the situation.

Lease renewals also allow for reduced risk of vacancies. People do break leases, yes, but keeping up with utilities, HOA fees, and other upkeep tasks doesn’t stop when a property is vacant. Another benefit is that maintenance issues are often identified sooner when a tenant is actively living in the property. Therefore, damage like water leaks will be found sooner rather than later and will be easier to repair.

Overall, lease renewals can help create stability for both property owners and tenants, financially and operationally.

When Should Lease Renewal Discussions Begin?

So, how should you go about providing a lease renewal to your tenants?

As long as you are willing to keep renting to the tenant, you can send them renewal information through a letter (whether it be via mail or email). Let them know their lease term is approaching expiration and ask whether they intend to renew. You should send out the renewal letter with enough time for them to make their decision. Be sure to check your local laws and regulations on lease renewals, as some areas state a specific time frame that these types of conversations have to happen. In many cases, beginning renewal discussions about 90 days before lease expiration provides enough time for everyone to plan accordingly.

Also, be sure to highlight any changes or adjustments to the lease, including rental price updates, lease length options, and more.

Factors to Consider Before a Lease Renewal

Next, we want to note a few things that you should consider before issuing a lease renewal.

First, you do not have to offer a renewal. If your tenant hasn’t been reliable, has had complaints from neighbors, or has even left your property in poor condition, you can also give them a notice that you are not renewing their lease. This can give you the opportunity to strengthen your rental application, create a tenant screening process, and find better tenants for the future.

Whether you are renewing with your current tenant or starting with someone new, you should also take this time to evaluate your rent price. Are you making profit or do you feel like you’re cutting yourself short? Also keep in mind that any large increases may drive current or potential tenants away. Be sure to check local laws and regulations again as well, because some areas may have limits on how much you can raise rent.

Why Professional Property Management Makes Lease Renewals Easier

In the end, not every lease renewal will look the same. Some go smoothly, some call for updated lease terms, and others may have issues that arise unexpectedly. Professional property management helps owners make informed decisions based on current and projected market conditions as well as your property goals. Working with a team like Sherman and Hemstreet can help you reduce vacancies, improve tenant retention, and support long-term profitability, even when it comes down to those ‘simple’ administrative tasks, like lease renewals.

Give us a call today for your Augusta, Georgia property management needs.