Three Things to Consider at Lease Renewal Time
When it is time for a lease to be renewed, many investors can feel a little unsure as to what is the best approach to take, particularly if the current tenancy has not been as smooth as they would like.
As with all big decisions, it is easy to get overwhelmed with “all” the possibilities and start to overthink the process so we’ve put together our three top considerations for investors when the end of a fixed term agreement is on the horizon.
1. Are the renters meeting their obligations under the lease agreement?
This is pretty straightforward to work out. Are they paying the rent on time, are they
maintaining the property, are they upsetting the neighbours?
If they are not doing the right thing, then the decision not to renew is fairly easy.
It is when they are great renters most of the time that you may be feeling a little unsure as to which way you should go.
This is where a conversation with your property manager about your concerns is valuable. They will be able to talk you through what options are available and run you through the worst case scenarios and how to avoid them.
2. Current market conditions
How long would it take to lease your property if your property was available for rent and the amount of rent you are going to be able to achieve are other key considerations when deciding whether to renew the current lease.
Because those days without rent can quickly add up when a property is for lease, even in a “hot” market. Locking in a slightly below market rental amount with a great renter is a strategy many property owners utilise to maximise the return they achieve from their investment.
3. Your Future Plans
Whilst life tends to throw us a few curve balls at times, and we can’t always plan for every eventuality, when it comes to an investment property, it is important to be looking ahead.
Is there a chance you will need to move into the property yourself at the end of the year? Do you need to upgrade the bathroom or replace the roof as part of your maintenance plan? Has your Accountant advised it will be time to sell your property in the next financial year?
Getting as clear as possible about what your expectations are for your investment property over the next 12 months (and longer) will help make the decision regarding renewing a lease that much easier.
And of course, we are always here to help with any questions you may have about how your plans may impact renewing the current lease.