Though there are always exceptions, your typical lease agreement will probably last for one year.
After that, you and your tenants will have the choice to sign a new lease agreement for another lease term.
If you have high quality tenants living in your rental property, and you seek to build a successful rental property business, it is a good idea to consider inviting them to renew their lease with you.
After all, it costs more to acquire new tenants for your property than it does to retain the same ones, and renewing leases with existing tenants helps to lower your tenant turnover rates.
Plus, as a landlord, your goal is to keep your tenants leasing from you as long as possible so that you can continue to collect a consistent rent payment each month.
That said, let’s take a look at what you should do when it comes time to renew your tenant.
How to Approach Lease Renewals with Your Tenants in Bowie, MD
1. Ask Yourself If You Want to Offer a Lease Renewal
Keeping your current tenants in your rental property is (almost) always a good thing – that is, if they pay their rent on time, get along with the neighbors, don’t cause you any issues, and care for your property the way you want them to
However, if they cannot pay their rent on time, or always have an excuse for being late, are disruptive to others in nearby properties, constantly contact you or your Bowie property management company with complaints and are difficult to reason with, or have damaged your property in any way, you should cut your losses and look for higher quality tenants.
When it comes time to consider offering your current tenants a lease renewal, think about what kind of tenant they have been over the course of their tenancy, and make your decision accordingly.
2. Decide a Lease Term Length
Once you have decided you will offer your current tenants a lease renewal come the end of their lease term, you must decide on the new lease term’s length. You have several options:
- One-Year Lease. Invite your tenants to stay another full lease term with you. This is typically one year (though some landlords allow for longer lease terms to ensure lower tenant turnover rates).
- Short Term Lease. If you know you want your tenants to renew a lease with you, but are unsure whether you want them to stay for an entire term, consider offering shorter lease terms such as 6 or 8 months.
- Month-to-Month Lease. You may find out that your tenant is interested in renewing a lease with you, but on a month-to-month basis. This can be a temporary solution to a vacant property, however, keep in mind that either you or your tenants can break month-to-month leases at any time (usually with a 30 days’ notice). This leaves very little time for you to prepare your rental and place new tenants without experiencing a vacancy.
Deciding how long you want to extend tenancy to your existing tenants is largely personal. It will also depend on what you plan to do with your property long-term.
However, if you can secure another full lease term with a good tenant, it’s definitely recommended.
3. Draft a New Lease Agreement
When you decide that you want to extend a lease renewal to your existing tenants, you need to draft an entirely new lease agreement with the help of your Bowie property management company.
This way you can designate the new lease start and end dates, as well as make any changes to existing lease provisions that you want.
For example, you may consider raising the rent in response to booming market trends.
On the other hand, you may want to offer a discounted rent rate as an added bonus for renewing with you another term.
You will also need to omit things such as security deposit clauses and first and last month’s rent collections, as these provisions do not apply to the next lease term.
Lastly, you may want to make changes to some of the more specific clauses you had initially placed in the original lease agreement.
For instance, maybe you will lift the no-pet policy and let your good-standing tenants get a dog.
Or, perhaps you will allow them to make minor interior changes that are temporary in nature so they feel even more at home in your rental.
Whatever the case may be, now is the time to make any changes you want.
Once the lease is offered to your tenants, and they agree, this new lease agreement will be the official document used in any disputes that may arise.
4. Invite Your Tenant to Renew
If you have decided to offer your existing tenant a chance to renew their lease with you, extend the offer with plenty of time for them to decide.
In fact, it is suggested you offer tenants a lease renewal option 90 days before their current lease is about to expire, complete with a requirement that they respond within 30 days of receiving the offer.
Giving your tenants plenty of time to decide whether they want to renew or not will help them plan a long-term strategy, should they decide to decline your offer.
In addition, should your tenant decline your offer, you will have approximately 60 days to get the tenant screening process underway so your property does not remain vacant for long after they move out.
You may wonder why a great tenant that is satisfied with you and your Bowie property manager might decline the offer to renew a lease with you. Just remember: it is not always personal.
For example, your tenants may not want to renew with you because:
- They are moving out of state
- A rental closer to their workplace is available
- An unexpected life change has occurred such as marriage, divorce, a new baby, losing a job, etc.
In the end, there are many reasons why people move, and it may not always be because they don’t enjoy leasing from you.
5. Review and Sign
Last but not least, after you and your tenants have agreed to the new lease agreement, it is time you and your property manager go over the lease agreement line by line to make sure everyone understands what is expected of them.
Then, all that is left to do is gather a few signatures, and your tenants are on their way to leasing your rental property for another lease term.
Lease renewals are an integral part of the rental property business. They help reduce tenant turnover rates, keep vacancies at bay, and best of all, save you time and money.
Plus, if your current tenants are willing to sign on for another lease term, they must be satisfied with the services you are providing them.
If you are looking for a way to boost lease renewals, and give your current tenants even more of a reason to continue to lease from you, contact Bay Management Group today.
We are dedicated to providing both our property owners and tenants superior customer service. In fact, we do everything we can to ensure that your property is well cared for, rent is collected, and your tenants are happy living in your property.