Salt Lake City Property Management Tips to Maximize Lease Renewals

Many factors can impact what happens at lease renewal, including the economy and inflation. For property investors, cost-of-living challenges for renters can affect the return on investment (ROI) when residents struggle to keep up with rising rent prices. However, people may be more apt to rent homes (vs. buy) when the economy puts pressure on the housing market, which is a plus for investors. 

In addition, your current tenants may be ready to lock in and secure another year's lease with you when there is economic uncertainty. However, the downside is that expenses go up and may not be balanced with existing rental rates based on the prior lease agreement. As a rental property investor, you can make the best of lease renewals with the help of a Salt Lake City property management expert. Lease renewal is an ideal time to secure extra income, allowing you to maintain (or even boost) your ROI. So let's dive into how you can generate the ROI you need when it's time to renew a lease!

Lease Renewals: What's Involved?

Rental management companies will tell you that the best plan for lease renewals is to be proactive. Getting ahead of the lease renewal deadline (instead of waiting until the last minute) often improves your chances of renewing more residents for another lease term. 

Legal document Lease Renewal Agreement on paper close upOne method for staying on top of the lease renewals is having a "notification" plan in place. This involves discussing the lease renewal with renters before the current lease expires. You can do this in one of two ways:

  • Allow for a lease renewal option. This option allows the tenant to automatically renew the lease by sending you a notification before the renewal cutoff date (usually two months prior). It also gives you the opportunity to spell out any changes to the lease (i.e., rent increase, new rules, extra benefits, etc.).
  • You could request a meeting to sign the lease renewal and go over the new terms. This method may be appropriate for certain tenants who might not be sure they want to renew or for others who prefer a more personable touch when it comes to doing business.

Many tenants may be busy and not have time to meet personally. So, the lease renewal option is always a helpful one. Just be sure to give tenants a heads-up in case they forget. The best property management companies recommend sending them a reminder notification or contacting them by phone.

How to Determine the Amount for Rent on a Lease Renewal

When determining what type of changes you'll make to the lease, there are several factors to review. First, property owners should consider current economic conditions. What is the inflation rate? Is the inflation rate moving up or down? How does that impact rental rates? Conducting research and forecasting can help you set a new rental rate that renters can tolerate without pricing them out of the home they already enjoy. 

Property managers also recommend conducting a rental rate analysis as you get closer to the lease expiration to know the average rent for the area. Remember, you don't want to lose tenants due to a significant rate increase. Raising the rent "just for the sake of it" could lead to renters leaving instead of renewing. Replacing tenants becomes costly due to marketing and make-ready expenses plus lost rental fees. 

However, if a rental analysis shows that other similar properties have higher rates than your tenants currently pay, you could justify the increase with less worry about losing good residents.

Easing Your Tenants into a Rent Increase

Most tenants expect a rent increase when it's time for lease renewal. However, you can ensure they are by mentioning a potential increase when signing the original lease. You could even have a written disclosure in the lease that indicates the amount is for one year only and that a modest increase will likely follow in the next year.

Whether you have prepared your tenants for the increase or not, it's important to discuss the changes with them. To avoid damaging positive relationships with your renters, don't spring it on them at the last minute. As you discuss the new changes in rent, be open and honest about the cost of living, the "going" rental rate in Salt Lake City, and the economic forecast.

Office binder in handsIn addition to a rate increase, adding benefits or incentives can help offset concerns that you're charging more without renters getting anything more out of the agreement. For example, some property managers recommend offering a resident benefit package. The right Salt Lake City property management team delivers resident benefits and superb services that support competitive rental rates!

Never Miss Lease Renewal Opportunities with the Best Salt Lake City Property Manager

Working with a Salt Lake City property management company can take the stress out of lease renewals. To find the most qualified experts in the area, search for "property managers near me" or reach out to Reeder Asset Management! We help rental property owners navigate lease signings and renewals to maximize ROIs. Get in touch to learn more about our property management services!

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Posted by: Reeder Asset Management on July 14, 2022