Low turnover and vacancy rates are essential to becoming a successful landlord.
Renting out your home offers one of the best opportunities to build a steady stream of cash flow, should you find the right tenants for each property.
Once the perfect tenants are in place, renewing their leases year to year is one of the easiest ways to maintain that steady income flow.
There are many reasons why renters choose to move on a regular basis.
Things such as marriages or divorces, the addition of a child, or job relocations are just some of the various reasons people move from home to home.
Unfortunately, reasons such as those cannot be prevented and tenants are apt to move regardless of what you do to encourage them to renew their leases. However, as a landlord there are things that you can do to persuade tenants without those life circumstances to want to continue renting from you.
Let’s take a look at some of the most important tips for encouraging your Howard County tenants to renew their leases thus securing long-term tenants in your rental homes.
Lease Renewals in Maryland
In areas such as Howard County, Maryland there is the option to include an automatic lease renewal clause within the original lease agreement.
This clause allows the lease to automatically renew for another term (or on a month-to month basis should the tenant choose) at the end of the original term of stay.
To terminate this automatic lease renewal, the landlord or tenant must give proper notice to the other party indicating a lease renewal is not desired.
In order for a lease renewal clause to be considered valid and enforceable, the clause must be distinctly separate from the other lease provisions on the lease.
The tenant must acknowledge the clause and accept the terms with a signature on the actual lease agreement. If you cannot show the tenant’s signature, initials, or witnessed mark acknowledging the automatic lease renewal provision on the lease itself, you cannot enforce the renewal.
Should you wish to increase the monthly rent upon a lease renewal, it is your responsibility to notify the tenant so they can decide whether to take advantage of the lease renewal at the end of their stay. You must then negotiate a new lease agreement with the new terms. This is also the case should you wish to change any other terms within the original lease independent of rent.
Some leases do not have automatic renewal provisions. If this is the case, you must provide a new lease agreement at the end of the lease term to continue renting to that particular tenant.
For a closer look at what to include (and not include) in your Howard County lease agreements, take a look here.
Getting a Renewal
There are several things that you can do to encourage your tenants to renew their leases at the end of their original stay.
Many landlords feel that tenants should initiate the process of lease renewals yet this should not be the case. A tenant may not understand that process and if you are interested in renewing the lease with your tenant, expressing that can get the process rolling. If a tenant feels that a lease renewal is not an option, regardless of whether they wish to stay or not, they may begin looking elsewhere leaving you with a vacant property.
- Research rental rates in your area for comparable market rates; the key is to stay lower than it would cost your tenant to move to a comparable place.
- Have your property management company send out a renewal letter in advance to notify your tenant you are aware a lease renewal is approaching.
- Consider having your management company call the tenant personally to discuss the upcoming lease renewal options.
Inform Your Tenant
Keep your tenant updated should you wish to increase their rent upon a lease renewal. Tenants will not likely leave over a small rent increase, however surprising them at the last moment is not the best way to handle the situation.
- In Howard County notice of a rent increase is similar to a notice to terminate the existing lease. If you want to increase the rent for an upcoming lease renewal you must give notice in writing at least three months before the end of the current year of the tenancy.
- If your tenant is hesitant to renew based on a rent increase, consider giving them information about the local market. If comparable properties are in the same price range, tenants will be more likely to stay in your rental property.
Be Aware of Tenant Options
Understand that you are not the only one who may want new terms come lease renewal time. Anticipating your tenant’s requests for changes will make negotiations easier.
- Although many tenants believe they must exercise the automatic renewal clause in the lease, this is not always the case.
- Tenants do not have to exercise their option to automatically renew and in many cases won’t because it limits what can be negotiated in the lease renewal. If a tenant does not have all of their concerns addressed they may not sign a lease renewal and you will be out of luck.
If you have the perfect tenant in your rental home and wish to have them stay, offering incentives is a great way to encourage them to renew their lease with you.
Remember, if your tenant renews their lease, you will be saving money and time.
- Many landlords feel they must increase rent every year. Consider agreeing not to increase rent if a lease is renewed so that a great tenant will stay. If you always raise the rent a tenant is likely to find something else and leave because renting offers that flexibility.
- Another option is giving your tenant a deal on the first month’s rent of the new lease.
- If your tenant respects your property and pays on time (popular reasons for wanting them stay in your rental home) allow them to earn their security deposit back over time. This offers something of value to your tenant without costing you anything.
Be Good Landlord
- Handle repairs and complaints quickly, return calls and messages promptly, and be friendly. If you have little contact with your tenants because you use a property management group, be sure to employ a company with an exceptional reputation to deal with your tenants.
- Provide both interior decor and exterior curb appeal for your tenants. Utilizing cost effective ways to increase the value of the property and maintain the visual appeal will not only help your rental property remain competitive in the market, it will make your tenants happy to continue living in your property.
Exercising these tips for encouraging your tenants to continue renting your homes will increase the chances of you gaining long-term tenants. While renting is a lucrative business move in areas like Howard County, constant tenant turnover can wreak havoc on your cash flow.
Having a competent property management group by your side will better your chance of gaining lease renewals from your tenants.
Should you decide to use Bay Management Group for your rental property needs, rest assured that not only will original lease agreements have the proper renewal clauses available to your tenants, but every other aspect regarding your rental property will be cared for as well.