As a landlord in Milwaukee, one of your main goals is to get lease renewals from your tenants.
A lease renewal is when your current tenant decides to live in your property for another lease term. This is beneficial to both you and your tenant.
A lease renewal means you don’t have to look for a new tenant to fill your vacant property and keep your cash flow consistent. It also means that your tenant enjoys living in the property and renting from you.
These lease renewals can be tricky, though. So, we created a guide for landlords for when they want to pursue a lease renewal and how to execute the new agreement.
WHAT DOES IT MEAN TO RENEW A LEASE?
When the end of your current tenant’s lease is approaching, they may realize that they want to keep living in the property. This is the perfect time to introduce a lease renewal.
If the current lease automatically terminates after the term, you’ll have to write a new lease with a new period. If the lease automatically renews, then nothing more must be done.
So, once the current lease ends, your tenant has leased the property for yet another term, usually a year.
While this is great news for most landlords, especially if the tenant is reliable and takes care of the property, there are some disadvantages of lease renewals.
LIMIT ON RENT INCREASES
When a tenant decides to renew their lease, this limits how much you can increase rent, if at all.
Many landlords will increase their rent price by a small percentage when trying to find a new tenant to keep up with the market. However, when renewing a lease with a current tenant, they will most likely expect you to keep the price as it is.
Sometimes you can work out a $25 to $50 per month increase in the lease renewal agreement.
NO TIME FOR RENOVATIONS
If you were hoping to do some renovations to your property to bring it more up-to-date, you wouldn’t be able to do so if your tenant decides to renew the lease.
While this isn’t a huge issue, it can be an inconvenience if the landlord has already started preparing for renovations to be made. But they can always take place once the tenant decides to move out.
COULD GET STUCK WITH A PROBLEMATIC TENANT
There are some great tenants, and there are some terrible ones, but there are also problematic tenants. Just because you had a good tenant during the first lease term doesn’t always mean it will be that way with subsequent leases, as they could still pose a problem at any point during the lease term.
Accepting a lease renewal could have you stuck with one of these problematic tenants. However, as the landlord and owner of the property, you can always deny the renewal of a lease to your current tenant if you feel it’s necessary.
STEPS TO RENEWING A LEASE
There is a certain process that landlords must follow when they attempt to renew a lease with their tenants. By following these steps, you’ll have a smooth and likely problem-free lease renewal for your Milwaukee rental property.
STEP 1: APPROACH YOUR TENANT
The first step to starting a lease renewal is to approach your tenant about renewing it. According to Wisconsin law, landlords must go to their tenants 15 to 30 days before the end of the lease to ask if they plan to renew it.
However, we recommend that you ask them sooner, at least 60 days before the end of the current lease. This gives them time to think about their decision and you time to start planning on finding a new tenant if necessary.
STEP 2: PREPARE THE NEW LEASE
A new lease should be written if there are new agreements compared to the old lease or if the old lease automatically terminates at the end of the term.
You’ll have to prepare a new document with the updated information, especially if the rental price changes or there are additional clauses.
STEP 3: SEND AND SIGN
Once you’ve finished writing the lease, it’s time to send it to your tenant to review and sign. This should be a fairly quick step, especially if the lease is pretty much identical to the old one.
Simply have your tenant sign the agreement, sign it yourself, and make a copy for your tenant to keep.
Once that’s finished, you have successfully renewed a lease for your Milwaukee rental property.
TIPS TO ENCOURAGE LEASE RENEWAL
Since a steady tenant means consistent cash flow and actually saves landlords money, it should be a top goal for you if you own a rental property. Many landlords make the mistake of focusing on acquiring new tenants when retaining current ones is actually more cost-effective.
To encourage your current tenants to renew their lease, there are a couple of things you can do.
OFFER AN INCENTIVE
Make it appealing to your tenant to renew their lease with you. Offer them an incentive such as a discount on the rent or replacing an old appliance in the kitchen.
While it may set you back a few dollars, it will actually help you make a profit in the long run.
ACT PROFESSIONALLY AND FRIENDLY
Another way to encourage a lease renewal is to be an upstanding landlord to your tenants. This means acting friendly, attending to repairs and maintenance requests, and always giving notice before entering the property.
When tenants enjoy renting from you and respect the services and care you provide them and your property, they will be more likely to renew their lease for another year with you.
GET MORE LEASE RENEWALS WITH PERFORMANCE ASSET MANAGEMENT
You can increase the number of lease renewals for your rental properties in Milwaukee with a professional property management company.
Performance Asset Management is Southern Milwaukee’s leading property management company. With an experienced and professional team, we make it easy for landlords to earn passive income from their real estate investments.
Thanks to modern technologies such as online owner and tenant portals, innovative marketing tactics, and experienced property managers, we will help you retain tenants year after year.
Contact us today and see how we can help you increase your rental income and get more lease renewals.