Some of the best landlord advice we can give is that when you find a good tenant, do what you can to keep them around.
Your rental income depends on a high occupancy rate with great tenants, which is why lease renewals are so important. Unfortunately, many landlords don't place enough importance on the process of renewing rental leases.
Complacency leads to disappointment. In this post, we'll help you stave off complacency by telling you a few of the most common lease renewal mistakes to avoid. Keep reading and you'll maintain and even increase your rental income in 2024.
Not Giving Enough Notice for Lease Renewals
Typically, your tenant signs a year-long lease when they move into your apartment. In letting the lease expire, it'll turn into a month-to-month rental agreement and you'll be at the mercy of the tenant's decision to stay or leave.
If you want more security with your tenants, start negotiating lease renewals as early as you can. 2-3 months doesn't give you or your tenant enough time to make these important decisions or negotiate the contract. Instead, start thinking about a lease renewal 6-8 months prior to the current lease expiring.
Failing to Inspect or Walk Through the Property
When you've taken the time to thoroughly screen your tenants and they haven't given you any cause for concern, you may want to get the lease renewal done as quickly as possible. It's still in your best interest to perform regular property inspections.
Property inspections give you a clearer sense of how a tenant is treating your property. They may be a great tenant, but maybe they have a pet that's damaging the property.
Security deposits will help cover the cost of repairs. If the tenant is causing damage, however, you may want to adjust the rental agreement accordingly. You won't be able to do this without property inspections.
Not Increasing Rent the Legal Amount
If you've got a tenant, you may not want to scare them away by increasing the rent. You have to think about the business of it all, though. Increasing your rent isn't always about increasing profit; it's often about adjusting for inflation.
As a Brainerd landlord, you're entitled to increase your rent as much as you want with each new lease agreement. Doing it a little bit each year will combat inflation without alienating your tenants.
Being Unflexible With Good Tenants
While increasing rent is important for your bottom line, it's also good to be flexible with your tenants. You never want to drive a good tenant away with rent increases because a good tenant puts more money in your pocket in the long run.
Rental leases should involve a negotiation. Work with your tenant to reach a rental price that works for both parties. If they can't afford a 5% rent increase, it's okay to accept 4% or even 3% to keep great tenants around.
Get Help with Lease Renewals
Lease renewals can be tricky for landlords. If you're having trouble striking a balance between what's best for you and keeping your tenants happy, it might be in your best interest to hire property management.
At PMI Minnesota, we offer comprehensive property management services including lease negotiation and accounting. Contact us today to learn more about how we can help your rental thrive.
