Often you hear about a new tenant or existing tenant who accepts the renewal or new tenancy, only to not sign the lease until move-in day or when the old lease is set to expire.
What is your agency’s policy when it comes to getting leases signed? Do you or your staff rush around every month securing renewals and signings? Or do you follow up quickly to make sure you get those all-important signatures on the dotted line?
If “no” is the answer to that last question, letting your leases expire or waiting until the last minute reduces security for both the leaseholder, who might challenge your reputation if left without a home to live in, and the property owner, who might decide to part ways with you and enlist the services of another property manager.
Consider this unwelcome scenario: after telling the property owner his or her unit has been rented, you fail to get the lease signed by the tenant, who then decides to withdraw from the tenancy. Because you have told other applicants the property has been rented, the vacancy period becomes unexpectedly longer — and we all know what time equals. (Without that binding contract, prospective tenants can decide not to move in at any time, and it’s all legal.)
These 5 simple tips help reduce vacancy cycles
Follow these five easy — and I do mean easy — recommendations below, and you’ll never find yourself losing sleep (or money) over an unsigned lease.
1. Start your lease renewal process three months prior to the lease expiring.
First of all, this ensures a further term is secured for both the landlord and leaseholder with plenty of time before the lease expires. Secondly, this guarantees that the landlord has plenty of time to secure a new tenant should the current tenant decide not to renew for another term.
Thirdly, this allows enough time for you to provide ample notice to the tenant to vacate should the landlord not wish to renew. And finally, this three-month window provides ample time to negotiate any rent increase. Set up alerts to remind you three months before every lease expires using your property management system, or if you don’t have such a system, use a free tool like Google Calendar.
2. For new leases, ensure they’re signed as soon as the tenant accepts.
It’s always important to have the lease signed as soon as possible after acceptance of the property by tenant and property owner. We suggest 24 hours to ensure the tenancy is secured and to provide the necessary assurances to both tenant and landlord.
Financially, getting the lease signed within 24 hours rewards both the agent and the landlord, if you follow the best practice of collecting money upfront before the signing of any new lease. This enables the property owner to reduce the loss of rent while the property is still vacant and ensures you receive your commission promptly. Win, win!
3. Make lease signings easy.
Your company’s leasing process should be simple and streamlined. It’s equally important for both the landlord and the leaseholder to secure a lease on a property promptly. Always ensure you set the ground rules for the signing of leases and time frames for doing so. When terms are clear and simple, everyone enjoys peace of mind. It’s common sense and good business practice to ensure tenants understand their agreements in their entirety and the time frames for final decision-making.
At Jam Properties, we always make sure tenants come into the office to sign their leases. This gives us the time to sit down and explain the agreement they are entering into so they understand it completely. And if you’re thinking about sending leases in the mail or via email? I recommend avoiding that approach, unless the circumstances are exceptional.
4. A little incentive can go a long way.
With new tenancies, having the tenants commit to signing a lease quickly gives them the security of knowing they have landed a property. We have great little welcome gifts we give tenants when they sign their leases, simple things they tell us they love, such as vouchers for local gyms, beauty salons, and pizzerias.
5. Describe the rental market to tenants who delay their decision-making.
It’s a great idea to supply tenants with market research as to why the property is a great value. Often tenants tell us they will not renew their lease due to a rent increase, only to later to find themselves unable to secure another property to suit their needs, a decision they end up regretting. Educate your clients about what may or may not happen in the market to get them thinking that the more convenient, less expensive option is simply to renew.
In general, it’s good business to get on top of signing leases as quickly as possible, for the security of all parties, your own peace of mind, and your company’s reputation and financial well-being. And remember: without a signed lease in hand, as a property manager, you don’t have a binding contract!
Do you have any great suggestions to motivate tenants to sign on the dotted line? Please comment and tell us your ideas.
Read more on Resident Management