As of September 2022, the average rental vacancy rate in the United States is 5.6%. This number reflects the percentage of rental properties that currently do not have a tenant.
If you’re investing in a rental property, your goal should be to avoid vacancies whenever possible. The best way to do that is to convince tenants to sign renewal agreements.
Lease renewals keep your rental payments coming in regularly and prevent you from having to search for a new tenant.
In the article below, you’ll find a list of some of the mistakes that property owners make when it comes to leasing renewals. These tips should help you retain tenants and avoid the dreaded property vacancy. Read on to learn more about how to avoid these common mistakes.
Failing to Give Residents Early Renewal Offers
As a property investor, the last thing you want is to have a tenant leave your property when you don’t have another tenant ready to move in.
One way to keep tenants in your property is to offer them an attractive rent price if they’re willing to sign their renewal offer months before their lease is up.
While you might not like the idea of giving your tenant a discount on rent, it’s better to have a tenant that pays a discounted rent than to have your property sit vacant.
Be sure to set reminders or automate the lease renewal process so tenants are notified of early renewal offers well before the tenant’s lease is up.
Not Giving Tenants Enough Options for Lease Lengths
Tenants will be more likely to renew their lease if you offer flexible lease terms. When you send out your renewal agreements to your tenants, give them options for shorter leases and longer leases.
Some property managers will offer leases as short as eight months and as long as 14 months. You should also be sure to provide your tenants with the option to lease month to month.
If you do offer month-to-month leases, however, you should charge tenants a premium rent price to account for the added risk you’re taking on.
Failing to Keep Up With Rising Rent Prices
Sometimes you have to offer discounts to get tenants to renew. Other times, you can cost yourself money by failing to raise rent enough.
You should constantly be comparing your property to similar properties in the area and setting renewal rates accordingly. If you don’t, you could wind up locking a tenant into a long lease at a below-market rent price.
How to Avoid Mistakes When It Comes to Lease Renewals
Now that you’re familiar with some of the lease renewal mistakes that property owners make, you know how to avoid them. Avoiding these mistakes will save you from the headaches that come with trying to find new tenants.
If you want help finding tenants and keeping your property occupied at all times, contact the property management team at GC Realty and Development.