Your tenant’s lease is near expiration. You receive a call or an email from your property manager. They would like to discuss a lease renewal. For most property owners, this is the time when many questions arise. What do I do now? Do I need to do something? Is my tenant going to stay or leave?
The renewal of the lease does not need to be stressful or confusing. If done correctly, it is one of the simplest means of having your investment continue to earn money. A good tenant willing to remain is excellent news. It constitutes a steady cash flow for you and no vacant property with which to contend.
Let us guide you through what you can usually anticipate in this process. Being aware of these steps will allow you to feel prepared and make sound choices for your property.
The Process Typically Begins Early
A competent property management firm does not wait until the last minute. They begin contemplating renewal well ahead of the end date of the lease. Typically, this process starts roughly 90 days (about 3 months) before the termination date of the current lease.
This is a head start that provides everyone with sufficient time to think and make decisions without pressure. Your manager will most probably contact you first to initiate the conversation.
They Will Seek Your Input
This is your property, and therefore, your opinion comes first. Your property manager should call you to speak about your objectives. They will pose you a couple of straightforward but crucial questions.
Do you want the tenant to renew? Are you considering increasing the rent? If so, how much? Perhaps you are considering selling the property instead? Or maybe you would like to do some extensive renovations once the tenant vacates.
This is your opportunity to tell them your plans. A good manager will hear what you have to say and then offer you advice based on the local rental market.
They Will Speak to the Tenant
After they are aware of what you desire, the manager will proceed to speak to the tenant. They will inquire to find out if the tenant intends to remain or vacate. This is an easy conversation to discern their intentions.
If the tenant is content and wishes to remain, that is ideal. If they are not certain, the manager can discuss the advantages of remaining. If they choose to depart, the manager can then start deciding to acquire a new tenant, which avoids wasting precious time.
Pricing the Rent Correctly
This is a huge one. How much should you be charging for the upcoming year? Your manager will perform what is known as a market analysis. This is a big word for something simple. They will compare what other comparable properties in your area are renting for currently.
They are not making an educated guess at a number. They’re viewing actual data. If comparable houses are renting for higher prices, maybe it’s time to put up the rent a little bit. If the market is sluggish, it might be more intelligent to leave the rent alone so that you can maintain a good tenant. Your supervisor will share their suggestion and why they think this way, so that you can make an intelligent decision.
Managing the Paperwork
If your tenant decides to remain, then comes the paperwork. But do not fret, you do not need to do any of that. Your manager will draft all the documents. This involves the new lease contract or a renewal addendum.
They will ensure all the terms are understood. This includes the new rent rate, the end date of the new lease, and everything else. They will send this to the tenant to digitally sign. Once it’s signed, they will digitally keep a copy for you. It keeps things legal and neat.
What If the Tenant Refuses?
Occasionally, even with an excellent offer, a tenant will choose to look elsewhere. Their employer may be moving them, or they may require more room. This is not always bad news.
Since the process began early, your manager is not left in the dark. They can immediately switch gears from renewal to marketing mode. They will already have a plan in place to clean, fix, and market your property to secure a new quality tenant in a hurry. The objective is to make the time that your property is vacant without generating as little rent as possible.
Why a Smooth Process Matters
You might wonder why all this structure is important. Why not just shake hands with the tenant and agree to another year? Having a formal process protects you.
It makes sure the rent is always at the right market price. This maximizes your income. It also keeps a good relationship with your tenant. When things are handled professionally, tenants feel respected and are more likely to take good care of your home.
Most of all, it provides you with a sense of security. You understand that a professional is taking care of all the details. You don’t have to keep track of dates or try to find tenants for a response. You can simply sit back and wait for the notification that your revenue is secure for another year.
This is where the presence of a professional team comes into play. A reputable Lease Renewal Service in Northern Virginia will take care of all these steps for you. They are familiar with the local law and the local market, inside and out. They will be the go-between for you and the tenant, so everything goes on smoothly and free of stress.
Conclusion
The renewal period is a time of opportunity. It is an opportunity to lock up another year of stable income with a tenant you already trust and know. Knowing what to anticipate makes you view it not as a hassle, but as an integral part of safeguarding your investment.
