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Managing tenants when not renewing leases

One of the most awkward situations a landlord can face is informing a tenant that they will not be renewing their lease. Whether the tenant has been in the apartment for one year or ten, it can be a delicate matter. Proper management of the situation will help to avoid lack of final rental payment and property damage. Following these tips will help to make the situation easier:

  • Send the tenant a letter explaining that their lease expires soon. Sending out such a letter 45 to 60 days prior to lease expiration and following up with a phone call will generally lead to the most satisfying results. Remember that most leases specifically require notice at least 30 days prior to the next rental due date.
  • If the tenant was a good one, offer to provide them with a letter of reference for procuring a new residence. Many tenants feel a bit insulted by not being allowed to renew their lease. This action can help to soften the blow.
  • If the tenant was a bad one, make sure you avoid threats and insults during the process. Even if they are deserving. If you leave them with a hope that they might get some or all of their security deposit back, they will be more likely to play along. If you start the process the wrong way, they might simply write the money off and do who knows what to the apartment. Proper handling can lessen the chances that the tenant will intentionally do damage to the unit or not pay their last month’s rent.
  • If the tenant directly asks why they are not being allowed to renew, one response that is generally well accepted is to say that the apartment needs improvement, which can only be addressed if it is vacated. Most people will understand that.
  • Be sure to keep in touch with the vacating tenant after giving notice. If you tell them to move out in 45 days and never bother to check up on their move-out progress, you might run into an unpleasant surprise at the end of the lease term. People are often lazy and forgetful, so make do your part to make sure they stay on course.
  • If the tenant directly asks why they are not being allowed to renew, one response that is generally well accepted is to say that the apartment needs improvement, which can only be addressed if it is vacated. Most people will understand that.
  • As a preventative measure in the future, make sure your lease contains detailed language on the move-out process and what is expected of both you and the tenant. Performing a walkthrough inspection with the tenant before and after occupancy is also a good proactive measure. If everything is spelled out ahead of time, there will typically be less surprises and less room for argument.

If you follow these tips, your chances of a smooth transition will be much higher. Many of these tips also would apply to situations where the tenant is the one terminating lease renewal. No matter who starts the process, just make sure you do all you can to make the process smooth for everyone possible. That way you can move on to the next tenant as soon as possible, which will maximize your profits. And isn’t that was real estate investing is all about?

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