Did you know that for each tenant turnover, a property loses up to $5,000 on average? Losing good tenants can be expensive and turn into a bigger headache than you realize.
With the right leasing management services, you can save time and a lot of money just by understanding lease extensions.
Keep reading to learn how to go through the process smoothly.
Lease Extension vs. Lease Renewal
The outcome of a lease extension and a lease renewal might be the same, but they are not treated the same.
A lease extension agreement is a motion to continue the original lease. The lease will expire as usual, but a good tenant and landlord decide to keep the same agreement going beyond the original lease end date.
Unlike a lease extension, a lease renewal agreement can impose limits on agreements that benefit the tenant or the landlord. If the rental agreement is fine for both parties, a lease extension is the more appropriate option.
Lease Extension Agreement Components
There are important pieces of information that need to be present in a lease extension addendum from tenant details to property information. These components should also be in the extension:
- Lease details
- Adding security deposit
- Utility payments
- Legal consequences
- Parking details
- Additional rules
A lease extension agreement won't have everything that a new lease has, but it is effective in many circumstances.
Lease extensions can reduce vacancy by keeping tenants in locations that they may have difficulty renting otherwise. It benefits landlords by reducing the time and money needed to create a lease renewal.
Landlords might find that a new lease extension agreement is the easiest way to retain top-tier tenants. To ensure you write the agreement properly, hire leasing management services.
Extending a Lease Agreement
Extending lease terms with a signed lease agreement requires knowing the steps to take. Once you decide you want to extend a lease, follow these steps:
- Review the existing lease agreement
- Communicate your intentions
- Provide the lease extension addendum
- Have both parties sign the form
In some situations, lease extensions are not recommended.
If tenants repeatedly breach an existing lease agreement, it's best to terminate a lease to get rid of bad tenants. Let the lease expire and hire a property management company to help you find quality tenants.
Property managers can also help with the eviction process if it comes to that point.
You should also avoid extending the lease if renovations are needed. If you have people living in a unit while renovations are happening, unforeseen problems may arise.
How Property Managers Can Help With Leasing Management
Leasing management is not a one-size-fits-all matter. If you have quality tenants, consider a lease extension over a lease renewal. If you want to get rid of bad tenants, let the lease expire.
No matter what you choose, property managers from PMI Alliance can help you out. We can provide you with tenant screening services, lease renewals, and much more.
Ready to learn how we help Dallas landlords like you? Contact us today to get started.