It’s no secret that the pandemic has caused a large number of issues in the real estate industry. This has made it increasingly important for property managers to send lease renewal letters to their tenants prior to their lease expiration.
Let’s take a look at everything you should know about this process, and why it’s so important.
1. You Can Keep a Steady Flow of Income
To make the most of your property, you’ll need to establish a steady flow of income.
Having your tenants vacate will only complicate your streams of revenue. With that said, this is where the lease renewal letter comes into play.
Lease renewal letters help prevent tenants from walking away when their lease is coming to an end. It also helps reduce the chances of you losing out on potential revenue.
Additionally, you can also highlight any changes that will impact the upcoming lease term. By sending out lease renewal letters, you will be able to simultaneously retain your tenants and inform them of any adjustments they should be aware of. For instance, you may no longer find it suitable for your tenants in a certain neighborhood to frequently have a large number of people at their house who park in the street.
2. Acquiring New Tenants Can Be Expensive
As we previously mentioned, vacating tenants can be bothersome and inconvenient. Acquiring new tenants isn’t always cheap either.
You should aim to avoid these situations by catering to your tenants and providing convenience where necessary.
As you might know, it isn’t always easy to find a suitable tenant while avoiding long periods of vacancy. This is the entire reason why tenant screening, and lease renewal letters, exist.
Let’s say you may have a property available to rent due to a new vacancy. There is no guarantee that new applicants will be able to meet your standards. For example, let’s assume that 10 people apply to rent a house that you manage. However, all 10 applicants have egregious issues with their applications.
These could include felony convictions, poor credit scores, or even previous evictions. The longer you look for tenants, the more money you will end up spending. This is due to the fact that bills related to utilities, mortgages, etc. will come straight out of the pocket of the owner.
So, ensure that you’re proactive with sending your lease renewal letters. Doing this will allow you to get a head start on the process and give yourself enough time to find a new tenant for your property.
3. Good Tenants Are Worth Holding On To
Not all tenants are created equal. Some tenants may be responsible, but they may have a difficult time paying you on time every month. Other tenants may be late with their payments and they could also cause damage to your property.
You may not experience any warning of this type of behavior until after the tenant has already signed the lease. Those who have been involved in property management for an extended period of time know how valuable good tenants are.
So, it’s in your best interest to keep them at the property as long as it does not cause complications for the tenant. For example, you can’t always expect tenants to stay if you significantly increase their required rental payments.
Either way, it’s important that you keep those who are great as this will help reduce the long-term costs that you experience filling vacancies.
When Should I Send Out Letters of Lease Renewal?
You should send out your letters of lease renewal at least 60 days before the end of the existing leases.
This will give you ample time to find new tenants if necessary. However, there are some exceptions. If you plan on raising the rent (something that should be done in accordance with inflation) or adding additional fees into your contract, then it may benefit you to send out these letters even earlier than 60 days before the end of your existing leases.
Once you’ve sent out these letters, it’s important that you carefully analyze the responses. If you don’t find someone, then you can always offer an extension to those tenants that need it.
Just make sure that you do so in adherence to your contract.
How Should I Send This Letter?
In order to make the logistics a bit easier, you should send out your letters of lease renewal via certified mail. This will ensure that all tenants who have received the letter are aware of it. Furthermore, if there is any question or confusion regarding your letter, then your tenants can always reach out to you via the contact information provided.
It’s also a good idea to email the same document to your tenants just in case they have not gotten around to opening the physical letter.
It's Essential For Property Managers to Send Out Lease Renewal Letters
Property managers can encounter a large number of complications should they delay sending lease renewal letters.
These range from having difficulty finding new tenants to interrupting a stream of passive income. As long as property managers consider the above advice, there likely won’t be any issues in the future.
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