The average renter in the United States stays in a building for 27.5 months, which is a little more than two years. Given that the majority of rental leases are for 12 months, it is clear that a high percentage of tenants successfully negotiate a renewal on their lease.
If you are a landlord, it is important to understand how to negotiate a lease renewal, especially if your current tenants are coming to the end of their contract. If you are happy to continue with them as your tenants, there are a number of things to consider, including negotiating a rent increase.
In this blog post, we will take a closer look at the lease renewal negotiation process. Let's get started.
Should You Renew Your Tenants' Lease?
This is the first question you must answer as a landlord when your existing tenants' lease is about to expire. There are a number of reasons why you should choose not to.
For example, if the tenants have caused property damage, performed illegal activities, paid late, or caused trouble within the building. Of course, if you are happy with your current tenants, the decision to renew should be easy.
Negotiating a Rent Increase
If you wish to increase the rent payable by your tenants in a new contract, it is important that you act legally. Double-check your local tenancy laws, which vary by city and state, to ensure that any rent increase you make is legal (likewise that the increased amount is legal).
Make sure the rent increase is presented to your tenants in writing and inform them with plenty of time before the current lease termination date about your plan to increase the rent. By partnering with a property management company, you can ensure that your actions are legal and proper when it comes to increasing rent.
Consider Compromises From the Tenants' Side
In some cases, the outcome may be straightforward. For example, either the tenants will agree to the rent increase or choose to move out at the end of their current lease. They may also come to you with compromises.
For example, they may offer to sign a longer lease in exchange for a smaller rent increase. They may also offer to take on some maintenance responsibilities in exchange for a lower rent or suggest a rent-to-own option (if you are open to potentially selling your property).
It's worth weighing up any such offers made by your tenants before coming to a final decision.
How to Negotiate Lease Renewal Options
The above information will help you to understand how to negotiate a lease renewal that you, as a landlord, will be satisfied with. In Las Vegas, choose the trusted property management team at Avalon Realty and Oaktree Management.
We will oversee all aspects of your rental property's management and lease renewal, and ensure that both you and your tenants are satisfied. Contact us today to learn more.