When the resident’s lease is coming to an end, you have a decision to make. If your current resident wants to stay longer you can choose between renewing their lease or finding another resident. Renewing it means that, at the end of the lease term, you and your resident decide to renew the contract. If you choose to renew, you create a new lease with similar terms to the original, and both parties need to sign again. You need to consider that finding a new resident will cost you time and money. The more time it takes you to find a new resident the more money you are losing. Every month that your property is vacant you are not producing cash flow. That being said we do not advise you to keep a bad resident. A bad resident is not only a hassle to deal with, but can also cost you thousands of dollars.
You would not want to renew to a resident who is paying rent below the market rate or who pays rent late. You also want to avoid renewing to a resident who complains a lot or makes big issues on minor maintenance problems. You want to avoid difficult residents who create problems or disrupts the neighbors. Most importantly you do not want to renew to a resident who causes damages to the house or makes illegal use of the house.
Some of the disadvantages of renewing your are that you may be limited to the amount you can raise the rent. You also have to make sure you follow your state’s laws in order to increase a resident’s rent. If you are planning on renovating the house then you certainly do not want to renew. Making renovations when someone is living on the property can be a real hassle and cause a lot of problems.
If you have a good resident you definitely want them to stay and avoid having to find new residents. It is also important to mention that your current resident understands your rules and you will probably have fewer problems with them. A good resident is one who pays on time, takes good care of the property, notifies you of maintenance issues and respects neighbors. Renewing will avoid vacancy costs & apartment turnover. They are a great opportunity for you to save time and money.
Renewals will save yourself from:
- Possible move out repairs
- Vacant property utility costs
- Marketing the property
- Screen potential residents
- Showing the property
- Signing new lease agreements
- Collecting money
- Going through a new move-in checklist
After considering all factors decide if it is a good time to renew the lease or not. If all of these is overwhelming you can have a property management company that can help. At PURE Property Management, we have the experience, tools, and resources to effectively manage your property.