Profit is always the driving force behind property management policies, including the decision whether to renew a tenant’s lease.
Many landlords believe that long-term leases are the way to keep costs low, while others say that lease renewals prevent market-level rent increases. Keeping the same tenant long-term also can make it harder to keep up with repairs and maintenance.
Your decision whether to renew a lease must take into account a number of factors, including the condition of the property at the time of renewal, the current market rent, vacancy rates in your area, and the number of units you have coming up for renewal.
When making your decision, consider these do’s and don’ts:
Don’t renew a lease on a tenant until you have taken the time to inspect the rental unit. Just because the tenant has paid on time and has never complained doesn’t guarantee the property won’t suffer from another year with this same tenant.
Don’t renew a lease without being familiar with the current market conditions for the property.
Don’t include an “auto-renewal” provision in the lease that allows a so-so tenant to renew for another year.
Do provide for rent increases in your lease agreement.