One mistake I see made all the time…
In my coaching practice, I often see one common mistake Rental Property Operators (landlords and property managers) make when renewing their leases – something that can easily be implemented into any real estate rental business no matter the size. For those of you that have followed me since I first published The Time-Wealthy Investor, you know I’m all about infrastructure and process. Most important, don’t do anything unless you can do it systematically and consistently.
The mistake? Resident Leases are nearly always one-year in length – and I have no idea why.
In nearly every rental market, there is an ideal time for Rental Property Operators to enter into leases. I refer to this as “Leasing Season.” In most Midwest markets, for example, this generally starts sometime in April and ends before the kids go back to school in early August. It would make sense then, for any new leases to end within the ideal leasing season with enough time for the unit to be vacated by the previous Resident and the property to be cleaned, turned, and marketed
If, given the above leasing season example, you find yourself with a vacancy in late September, and you’re entering into a lease in October, it doesn’t make sense to end the lease at the end of September of the following year. It would be better, in this instance, to end the lease in May or June to give yourself time to get the property re-rented should the Resident decide not to renew. You could then do your renewals on a year to year (May to May or June to June) basis to stay within the ideal leasing season.
This is an easy thing to implement. This allows you to always be in a position to negotiate from a position of strength. Whatever it is you decide to roll out, be sure your infrastructure and processes are able to perform it consistently. Thanks for reading!