Chapter 6

Everything You Need to Know about Lease Renewals

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The Complete Guide to Rental Leases

Sign Your Rental Lease

In the last chapter, we covered how to handle leases that end early for various reasons, such as the tenant breaking the lease, a tenant abandoning the property, or a landlord needing to evict a tenant. But if you’re lucky, and you have great tenants, then you should offer a lease renewal. In this chapter, we’ll cover:

  • Reasons why a lease renewal won’t always work
  • Benefits of renewing your lease
  • What to consider before offering a renewal
  • When to offer a renewal
  • How to offer a renewal

Reasons Why a Lease Renewal Won’t Always Work

A lease renewal won’t always work. For one, you may not want to renew with a tenant if he or she has skipped rent payments or didn’t take care of the property. And sometimes tenants will say no to a renewal for various reasons:

  1. Tenant is moving out of state for a new job
  2. Tenant moves closer to their workplace
  3. Tenant has a lifestyle change: marriage, divorce, having children, losing a job, or getting a pay increase
  4. Tenant desires a new location or better amenities
  5. Tenant is frustrated with the landlord

You can’t avoid most of these reasons, such as a job or lifestyle change, but you can make the rental experience positive, which will increase the chance of a tenant renewing. It’s important to welcome new tenants to your rental property, fix repairs quickly, and make it convenient for tenants to pay rent by collecting rent online.

More than anything, if you build trust, credibility, and follow through on your promises, then tenants will enjoy working with you. In fact, these are some of our core values here at Rentalutions.

Learn 15 more ways to be an awesome landlord.

Benefits of Renewing Your Lease

When you renew your lease, you keep good tenants and avoid having to find new tenants. You save yourself the following tasks:

Plus, every time you find new tenants you risk renting to bad tenants. Sometimes, even a landlord who has a thorough tenant screening process can end up with nightmare tenants.

What to Consider Before You Offer a Lease Renewal 

You should only renew a lease with good tenants. Your tenant is good if he or she pays rent on time, takes good care of the property, and respects neighbors. Conversely, you don’t want to renew with tenants who skip rent payments, are difficult to work with, disturb their neighbors, damage your property, or do anything illegal in the unit.

If you don’t renew your lease, you could lose your best tenants. Are you going to lose your best tenants this year?

Three Easy Steps to Renew Your Lease 

Rental Lease Renewals

When to Offer a Lease Renewal 

We recommend offering your tenant a lease renewal 90 days before the lease expires. You can offer in person, send an email, or send a letter. The goal is to receive a reply within 30 days so that you have at least 60 days to find a new tenant if your current tenant declines the renewal offer.

How to Offer a Lease Renewal

Here’s an example of how to offer a renewal:

Dear tenant’s name,

Your current lease will expire on mm-dd-yyyy. You’ve been a great tenant and I would like to offer you a six-month, one-year, etc. renewal at $x/month. If you are interested, I will send you a new lease. If you have any questions or concerns, I’m happy to discuss them with you.

Thank you,

Your name

One thing to decide before you offer a renewal is if you want to change your rent price. You can motivate the tenant to stay by lowering your price or keeping the price the same. However, you may also increase the rent price if the market conditions warrant an increase.

For more, learn how to get tenants to renew their rental lease.

Month-to-Month Rental Leases

A fixed term lease renewal is when you sign a new lease with current tenants for a fixed period of time. However, tenants may want a month-to-month lease renewal instead, meaning the lease continues on a month-to-month basis. This is helpful for tenants if they want to temporarily stay in your unit. In a month-to-month lease, either party can end the lease at any time with adequate notice, which should be specified in the lease (typically 30 days).

If a month-to-month lease is agreed upon, you still need to sign a rental lease agreement. We strongly suggest you raise the rent if you allow a month-to-month lease. You can justify the higher rent because you are offering flexibility and convenience to your tenant. Month-to-month leases are better than not renewing with a good tenant, but keep in mind that it’s only a short-term solution.

Below, we’ve included a venn diagram that compares month-to-month leases to lease renewals:

Lease Renewal VS. Month-to-month Renewal

Next Steps 

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In our Guide to Rental Leases, we’ve covered:

  • An introduction to rental leases
  • The benefits of online rental leases
  • How to comply with landlord-tenant laws in your rental lease
  • Important rental lease clauses, addendums, and disclosures
  • How to customize rules your rental lease
  • Breaking a rental lease and grounds for eviction

Continue reading below for a complete summary of our guide to rental leases.


Also published on Medium.

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