Every landlord wants a long-term tenant to occupy their rental property. It reduces rental vacancies and eliminates the hassle of advertising the home, getting it rent-ready, finding new tenants, and conducting screening processes over and over. As a Nashville landlord, the best way to get a long-term tenant is by focusing on retaining your current occupants and that means – ensuring lease renewals.
Based on our experience, tenants feel inclined to renew a lease when they have a good landlord-tenant relationship, the rent increase is not exorbitant, and the landlord is offering some additional perks for continuing. Having said that, there is more to lease renewals than meets the eye. So, here is a complete guide for Nashville landlords, discussing lease renewals, their benefits, and how offering them can improve your rental business.
The Benefits of Lease Renewals for Your Nashville Property
Renewing your renter’s lease instead of terminating it after it expires has numerous benefits. Here are some –
Eliminates turnover costs
Helps you retain good tenants
Offers consistent rent collection
Opportunity for rent increase
Saves renovation costs
Lowers vacancy rates
Saves time and effort
In addition, your current renters already know the lease terms and are well-acquainted with the home and your neighborhood. You have a rapport with them and a well-established, healthy landlord-tenant relationship. Lease renewals can help you retain all these advantages instead of finding new renters and building a bond with them from the start.
Besides, when your existing renters are qualified, responsible, take good care of your Nashville home, report any maintenance issues on priority, and pay rent on time, renewing their lease can be a great relief for both parties.
Incentives as a Tool for Lease Renewals
If you have a good tenant in your rental home and want them to stay, offering incentives is a great way to encourage them to renew their lease with you. These incentives or add-ons can include free upgrades in the unit, an additional appliance, free rent for a month, discounts on bills, cash incentives, coupons, vouchers, and more. These bonuses can be a reminder to your renters about how much you appreciate them. It may also lead them to consider renewing their lease agreements with you. However, ensure that you do not pressure the occupant. Let them make their own decision. The incentives only serve as a small perk for deciding on a renewal.
Can You Increase the Rent if You Are Renewing the Lease?
Yes, you can increase the rent if you are renewing the lease. Typically, in a yearly lease, landlords can raise the rent only at the time of lease renewal unless mentioned otherwise in the lease agreement. You can also increase the rent in a month-to-month lease. In either case, you must provide your renters with a rent-increase notice, usually sent 30 days before the increased rent period begins. Thus, your tenant gets adequate time to consider if they want to stay with you or if they want to reject the offer and move out of your rental home.
When to Offer a Lease Renewal?
While there is no specific notice period when to ask your tenants about the lease renewal, we recommend landlords offer renters the lease renewal at least 60 days before the lease expires. Ask them to send a reply within 30-45 days. This leaves you with 45-60 days to plan for re-leasing if they choose not to take the offer.
Addendums and Amendments for Nashville Lease Renewals
Addendums are the additional legal clauses you can add to the lease agreement. Landlords can add a new clause, or modify one of the clauses in the lease by adding an addendum. When the landlords and tenants both sign on the addendum, it can be added to the agreement instead of changing the original agreement.
A few examples of addendums typically mentioned in lease agreements are, Improvements and Modifications Addendum, Lead-Based Paint Addendum, Mold Lease Addendum, or Pet Addendum.
You can use amendments to make necessary changes to the existing lease. These could be either an addition of a new clause, removing an older clause, or changing one or two clauses or terms.
Difference Between Lease Renewal and Lease Extension
Landlords often get confused between the concepts of lease renewal and lease extension. A lease renewal refers to the tenant signing a new lease that is more or less similar to the old lease. This renewal is usually for the same duration as the previous lease. It may also include some new, specific addendums or amendments that impact the clauses or terms of the lease.
On the other hand, a lease extension extends the existing lease, which does not require the landlords and tenants to sign a new document. They have to follow all the terms and clauses mentioned in the initial lease. Also, the lease may not be extended for the same duration as the previous lease. For instance, if a lease is continued for one-two months after the official 1-year duration is complete, it is a lease extension, not a lease renewal.
Is Offering Lease Renewals Always the Best Option?
Yes, provided the tenant is worth retaining. Naturally, as a Nashville landlord, you cannot offer lease renewals to every one of your tenants. There could be situations when renewing the lease would not be the best option. For instance, if the existing renters often miss rental payments or misuse the property, retaining them would not be a good idea. Also, if the tenant is moving out for personal reasons, like a job-change, or because they are unhappy with the neighborhood, you must respect their decision and terminate the lease.
Property managers prioritize renters’ issues and ensure that they have a convenient stay. They also offer the right incentives that can get the residents to renew the lease agreements wholeheartedly. Consider working with a trusted company like Omni Property Management. We have worked in Nashville real estate for over 15 years and have a strong track record of successful lease renewals.
For more information about our services, get in touch with us.