Rental renewals are a great way to keep good tenants. At DenCO Property Management (DenCO), we believe it is wise to be proactive to retain good tenants. Property managers do not want to lose renters who pay on time, care for the property, adhere to the lease agreement, and are courteous. Below are the advantages of rental renewals:
Avoids Turnover Costs – Anytime a tenant vacates, the property incurs costs to prepare for the next renter, such as painting walls, re-staining hardwood floors, fixing wall holes, and replacing broken tiles. Tenant retention avoids these costs and improves the cash flow to property owners.
Reduce Rental Vacancy Rate – Property owners lose rental income when the rental property is vacant. Every month of vacancy equals an 8.3 percent gross rent loss (12 divided by one). Two months equal to a 16.6 percent gross rent loss. Keeping leaseholders happy increases the likelihood of lease renewals and maintains owner rental income.
Saves Time – Retaining tenants save property managers hours switching all the utilities, posting ads, showing the home, screening, and walking new tenants through the leasing process. Also, current tenants know their responsibilities because of lease familiarity. Retaining them saves property managers the trouble of adjusting to a new tenant.
Rent Increases – Property management companies should consider raising rent during renewal. However, it is never a good idea to raise rents on good tenants to such an extent that they decide to give notice. Any increase should be fair and based on market research.
How to Get Renewals?
Most tenants are unaware that their renewal is pending, so it is best to be proactive and ask them 65 days ahead. Asking ahead gives tenants ample time to think about their lease renewal. The tenant can be asked face to face, sent a letter, or emailed. DenCO recommends using email since it records the ask. If the tenant decides to renew, DenCO draws up a one-page lease modification noting any rental increase, change in terms, and the next renewal date.
Deciding Not To Renew?
Not all tenants are good. They might be tough on the property, pay late, not follow the lease terms, or be rude. DenCO calls the owner and discusses the option of not renewing. Not renewing allows the property manager to vacate a property and find tenants better suited for the rental. Tenant rights laws have changed substantially since 2022. For example, it is now unlawful to terminate a lease without cause. Now, it is best to evict with cause before renewal. Click here to get informed.
Build Trust And Credibility
DenCO has found renewals are easier if the landlord/tenant relationship is based on trust starting the day the renter signs a lease. We return messages promptly and are responsive in dealing with any complaints and repairs. Our bi-annual inspection policy keeps us on top of routine maintenance tasks. When a tenant is happy with their rental property and the property manager, they are likely to be open to staying longer. The City of Denver has expanded tenant rights extensively, but Colorado is still considered a landlord friendly state. Click here to view Denver’s helpful Renter’s Handbook.
Property owners, if you are looking for a professional property management company that can handle all rental renewal issues, please consider DenCO. DenCO manages over 150 rentals in the DU, Washington Park, and other neighborhoods in the Denver area and has been in business since 1990. Call us at (303) 722-9688.
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