2023 Guide To Lease Renewals

The secret to maximizing any property’s NOI as well as ROI lies in retaining residents and renewing leases. In this blog, you’ll discover the tangible benefits of renewing leases, learn effective ways to reduce tenant turnover & get residents to renew their leases, and see some steps you can take to renew a lease today.

What Are Lease Renewals?

When a tenant or a resident decides to continue living in a rental property beyond the agreed time frame, a process of lease renewal comes in place. Renewing a lease either involves drafting a brand-new lease with new terms, rules, and regulations or extending the terms outlined in the original lease. Either way, both the property owner and the resident must agree on the conditions and sign the renewed lease before it goes into effect.

Pro Tip: To stay on top of deadlines for all of your residents’ leases, invest in a good property management company. That way, you’ll have a manager who’ll have a record of all pertinent information and data.

Benefit Of Lease Renewals

As a property manager or owner, renewing more leases helps improve the bottom line. Some of the known benefits of lease renewal include:

• Reduced turnover costs: Renewing a lease saves a substantial amount of money. It takes a lot more in acquiring a new resident than to retain a resident.
• Save time on filling a vacancy: Marketing, advertising, and administrative tasks associated with filling a vacancy take a lot of time. Save time and money by renewing more existing leases.
• Reduces maintenance: When a resident moves out, a property owner or manager’s maintenance team has to work quickly and tirelessly to clean and repair the vacant unit. As a result, this may lead to additional costs and delay in other residents’ requests. 
• Keep reliable tenants: Great tenants are hard to find. So, it’s best to retain the residents who are responsible, reliable, and pay their rent on time.
• Build a stronger community: Reliable residents who renew their leases year after year spend more time getting to know their neighbors. When you retain residents longer, you create a stronger community base and therefore a better resident experience. 

How To Renew Lease– The Right Way!

Wondering how to retain the tenants? Here are the four ways to get more lease renewals:

1. Be Smart About Rent Increases

One of the top factors that dissuade renters from renewing a lease is the sudden increase in rental rates.  Raising the rent too much could potentially be the tipping point to dissuade a resident from staying. So it’s always wise to research rental rates in your area for comparable market rates. Generally, a 3 to 5% rental increase doesn’t cause much backlash but if your rental rate is currently above market average, raising the rent could potentially be risky.

2. Make The Renewal Process Legal & Seamless

Remember if the renewal process is complex, expensive, or time-consuming for the resident, they might reconsider and plan to move elsewhere. So as you approach the resident’s lease renewal period, it’s wise to prepare yourself and ensure the process goes smoothly.

Here are the four simple steps to renewing a lease seamlessly:

1. Adhere to your state laws
2. Send a thorough lease renewal letter
3. Draft a new lease
4. Finalize the lease renewal
   

Pro-Tip: Though in most cases, the period is anywhere from 30 to 60 days, it may be worth sending a notice 90 days before the lease expires. This gives your residents plenty of time to consider the renewal offer and respond. Also, in case any resident declines to renew the lease, you’ll have enough time to start searching for a new resident to fill the vacancy.

3. Offer Incentives 

If you feel that you have a reliable and trustworthy resident in your rental home already, offering incentives is a great way to make them stay. . Always remember, if your resident renews their lease, you will be saving both money and time. You can consider not increasing rent if a lease is renewed so that a great tenant will stay. This way you can encourage the great residents to renew their leases. Some of the other ways to sweeten the deal are: 

• Offer a free month, rent credit, etc.
• Include a gift card with your rent renewal notice.
• Invest in sweet gestures throughout the year (sending residents a card around the holidays or a Starbucks gift card on their birthday).
• Offer a new appliance, new plumbing fixtures, or fresh paint.

4. Invest In The Resident Experience

The easiest way to get more lease renewals is to make sure your residents are comfortable in the space. By investing in the resident experience, you can make residents feel at home — and no one wants to leave their home behind.

Some of the finest ways to create an unbeatable resident experience include:

• Handle maintenance requests quickly. 
• Host resident events. 
• Enable smart access throughout the building.
• Make a strong first impression. 
• Invest in a delivery management solution. 
• Maintain open communication.

Let Beach Front Property Management Do It For You!

To maximize NOI and save time for your entire team, hire Beach Front property management. They have years of experience and expertise to encourage your residents to renew their leases — and make it easy for them to do so. By investing in the right property management company, you’ll attain a higher rate of renewals and experience lower turnover rates.

Remember that lease renewal is simple — especially once you’ve implemented a seamless process. At BFPM, we carefully consider all state and local laws, so that you and your residents can enjoy stress-free lease renewals.