Four Tips For Landlords Renewing Your Lease Agreement
Four Pro Tips For Landlords On How To Renew Your Lease Agreement
Renewing a lease agreement between you and your resident is one of the most overlooked aspects of property management and yet it is vitally important for your cash flow and building a long-term tenant relationship. Here we will cover four pro tips for landlords to consider when renewing a lease agreement
Why is renewing a lease important?
This is a great question and means many things depending on who you ask so we will give you the basics from a property manager’s perspective.
- A chance for you to review your monthly rent. When renewing a lease you should always check the market rents in the area to determine if your property is due for a rent increase.
- An opportunity to walk through the house for any little issues- If you’re not performing quarterly walk-throughs of your property or if you’ve missed a couple this is a great time to walk through and check the condition as well as check off items on your safety assessments list.
- Enforce policy and procedures for your rental property
- Ensure another year of cashflow.
- You keep a great tenant in your property
Pro tips for landlords on how to renew your lease agreement
- Pro Tip 1: Follow the law! Takoma Park in Maryland does have rent control laws on the books and other areas in Maryland limit the amount that you can increase the rent per year.
- Pro Tip 2: Never just send your resident a new lease and ask them to sign. Use the lease renewal as time to reach out and say hello! Remember this is a customer service business.
- Pro Tip 3: Always get a new lease agreement signed. Do not send an addendum of lease extension or think that an email agreement is good enough.
The art of the rent increase at lease renewal time.
To raise the rent or keep it the same, that is the question. We often get clients who ask us about this and there is no one right answer. There are many factors that will impact this decision. Some points to consider are:
- Length of tenancy- A long term resident who pays on time and takes care of the property is worth their weight in gold
- Payment History- Do they pay rent and utilities on time every month or are you having to chase them down month after month?
- Current market rents- They do fluctuate and they can go down just as quickly as they can go up. Make you get a rental analysis!
- Amenities and renovations- Are you providing additional services? Have you had renovation work done to the property that increased the value or that would warrant a rent increase?
As a rule of thumb, you should always consider a small increase even if it is $25.00 a month and we never recommend going over 2% of the current rent unless there has been a significant increase in rent price in the surrounding area.
Pro Tip 4: Always consider vacancy loss and the cost of a unit turn!
This can be a tedious process and it does involve some work however keeping a long-term resident is always a good choice! If you need assistance with lease renewals or have questions on Baltimore property management services get it touch!