When the current lease for your Colorado Springs rental property comes to an end, you have two options: renew with the current tenants or advertise again for new ones. If you have tenants who pay on time and maintain your rental property, hopefully they want to stay and your decision is fairly easy. Either way, when the lease approaches its end date, there are a few things to consider when renewing the lease with your current tenants.
Are My Tenants Even Interested in Renewing the Lease?
One of the biggest questions when considering renewing the lease with your current tenant is whether or not your tenant wants to stay put. Based on stats from our own portfolio, in 2018, nearly 57% of tenants chose to renew their lease when it expired instead of moving out. National trends show similar results with the majority of tenants deciding to stay put as well, according to RealPage Inc.
What If I Want to Raise the Rent?
With the steady increases we’ve seen in Colorado Springs, it makes sense to try and keep pace with market rates and want to make the most from your investment. But don’t make the mistake of not renewing the lease with good tenants just to increase the dollar signs. Sticker shock can be a temptation to choose not to renew with long standing tenants just to increase rent, but what we’ve found is that between 2017 and 2018, more landlords saw higher increases by keeping their current tenants than starting over from scratch.
By negotiating a new lease with your current tenant at a rate that works for both parties, you don’t have to worry about playing to the demands of the market by decreasing your rate until it gets rented. You also don’t have to deal with a vacancy period where you don’t collect anything at all, which can often be six weeks or longer between tenants.
We’re not saying you can’t increase your rent, just that it may pay more to work with your current tenants on a specific increase rather than try to find someone else with the hope of increasing the rent significantly. You can also continue to increase the rent steadily according to market rates at each renewal so you don’t fall behind.
Is A Longer Lease Better?
If you’re happy with your current tenant and they want to stay, one option to consider would be to renew the lease for a longer period of time as well. Instead of offering a one-year renewal, maybe your tenants would be interested in signing for two. This ensures your home stays occupied longer and keeps good tenants in your home. And if your tenants are happy where they’re at, it’s a win-win for everyone!
When the lease expiration approaches, make sure to keep communication open with your tenants or your property manager and remember to consider all of your renewal options. If you’re happy and your tenants are, too, don’t let them go!