Renewing your Lease
We have written this article to benefit both tenants and property owners. When it comes time to renewing your lease, both sides might not have a complete understanding of what goes into it and why. Well, we're here to explain how to offer a lease renewal, when a price increase is justified and from the tenants point of view, how to do your due diligence before saying yes to renewing your lease.
HOW TO RENEW YOUR LEASE (FROM THE OWNER'S PERSPECTIVE)
This will vary based on the lease contract you agreed to, but in each and every lease contract between owner and tenant, there is a period of time where you must give notice as to whether or not you want to renew your lease. This can be 60 days, 30 days, 6 months, 9 months. It all depends on what is in your lease contract, so for starters: READ YOUR CONTRACT!
As a property management company, we email our tenants about lease renewal. We then send them a follow up text to make sure they received it. This eliminates any possibility of the tenant complaining that they didn't know about a lease renewal. Our email is generally a template that looks like this:
Hi (Insert Tenant Name),
Lease renewal season is upon us. We are writing this email to offer you a Lease renewal at your current residence. Effective (insert date) your new rent will (insert new price or same price). Please let me know if you would like to renew your Lease by (insert date). If you do, we will send a Lease to be DocUsigned or signed in person (whatever is easier for you). If you want to renew we must have a signed Lease by (insert date).
It spells out very clearly what the new price will be, when we need to know by and when a lease needs to be signed by. This is also reflected in our Lease Agreements.
PRICE INCREASE JUSTIFICATIONS TO USE
This varies on a case by case basis but most of the time, a price increase can be justified (and for a number of reasons).
Home insurance increased
Property taxes increased
You made significant improvements (new windows, siding, porch, heating system, floors, etc)
The market is dictating it (other properties that area similar to yours are commanding more in rent)
Now tenants reading this part might not like this, but the simple fact is when taxes go up in any business, the costs are passed onto the consumer. When insurance costs go up, the costs have to be passed onto the consumer. The tenant in this case, is the consumer. You don't want increasing rent? Don't support your local officials who consistently raise property taxes. It winds up hurting you in the end.
HOW TO RENEW YOUR LEASE (FROM THE TENANTS PERSPECTIVE)
Ok, so your landlord calls, emails, texts that he/she needs to know if you want to stay in your current house or apartment. There are a few things to consider and one big thing to keep in mind.
If the owner is even offering you a lease renewal, this is a compliment! That means they don't think you're that bad of a tenant and that you're following your lease. If you were consistently paying rent late, throwing parties, having unapproved pets in the home, destroying the property, etc then the property owner would not want you to stay, so a lease renewal is a way of saying good job!
If and when they increase your rent (and most of the time it WILL go up) try to quickly figure out if you're okay with it. Are you really going to move because it costs you an extra $30 to live there? When you look for a new apartment that takes time out of your week nights, weekends. You'll need to have another security deposit ready. You'll need a moving truck ready. Moving, is expensive and generally a pain in the butt. People don't like to do it unless there is a good reason.
REASONS TO CONSIDER MOVING OUT
You want to live in a different town.
You want to buy your own home.
You don't like your roommates.
You can find a cheaper place.
Your landlord does a poor job of managing the property and you've had it.
After you have given a little time to think, if you are ready to say yes to the landlord then make sure you execute your lease renewal as quickly as possible and understand that you're now locking yourself into that apartment/house for however long the lease agreement specifies!
That's it! To summarize, there are a lot of good reasons for increasing the rent on your rental properties and there are some good reasons why tenants might choose to leave (most of which have nothing to do with the cost). Each side needs to figure out what they really want. From our perspective as property managers in NJ, if you provide a good home to tenants, stay on top of repairs and give effort to make them happy, they usually stay a long long time.