Mistakes to Avoid during Lease Renewal

Property managers play a huge role in lease renewals. If not done right, landlords and tenants will suffer in the long run. Look out for these mistakes to avoid during lease renewal.

#1: Not releasing the renewal notice in time

When you own an investment property and you have a tenant in a lease, let’s just say your lease ends on August 31st, which is very common in the Boston area.

One of the biggest mistakes that a landlord makes is only sending out that renewal, or starting to talk to the tenants in advance, maybe 45-30 days ahead. Maybe 60 days for the majority of landlords. It is a huge mistake because you are not starting early enough, and that allows you, especially in a bad market, to potentially not have the time to find the best tenants for you.

With Green Ocean Property Management, we actually start sending the renewal notice nine months in advance, and that allows us to start at the top of the market price to have a greater number of people potentially looking at your property and putting the best tenant into your unit. You don’t want to scramble and just take anybody at the end of the day.

#2: Not putting the renewal agreement on paper

The second biggest mistake when it comes to lease renewal is only talking about it verbally. Typically when you first do a lease, you have a written signed contract and it will state all the terms, agreements, rules, and regulations. Once that lease expires, it goes to what is called the tenant-at-will.

If the landlord or property manager does not re-do that lease with all the new terms, the tenant can potentially leave with only a 30-day notice. They are not binded into a contract and, legally, they don’t have those same rules and regulations that you once put into place. You want to renew that entire lease every single year. We are also going to do a lease extension with renewal.

#3: Not conducting property walkthroughs

Another huge mistake is that you don’t walk through your unit prior to your lease renewal. We do our annual inspections typically around the holidays, from December to January. We will walk through the property, check and see if the tenants are taking care of it. If they’re not taking good care of it, we won’t renew them, or at least, we would sit down, talk to them about it, make sure they correct any issues, and go back and reinspect before we offer that renewal.

#4: Not increasing rents

Another one that is probably the most important one for an investor is that they do not increase the actual rents. That is a huge mistake when it comes to not doing a lease renewal. We hear reasons like the tenants were easy or they don’t complain, but you have to understand that you have expenses, and expenses go up: your water, your taxes, everything goes up. 

Tenants are going to expect you to increase the rent, and when you don’t, you set a very bad pattern. So after two years, three years, they can tell you “well, you didn’t increase it last year.”  You want to keep up with inflation at the very least, so make sure you are increasing your rentals. Make sure you have the market comparison to do it and see what your markets are like. If your market is stating that the rent went up by $50, make sure you are marketing it by that. Listen to the market, same with when the prices go down.

Our commitment

If you or anyone else you know is looking for a property manager that can help you through the lease renewal process, guide you through it, recognize the mistakes to avoid during the lease renewal, and help you make more money, please think of Green Ocean Property Management: where you get more than a property manager, you get peace of mind.