Debunking "Lease Renewal Season"
Updated: Aug 19, 2020
Recently, I received a mass marketing email from a nationwide real estate company claiming "Get prepared for lease renewal season." I paused to think. Lease renewal season?
As summer winds down, more advice pops up online that calls these warm months the "prime time" for turnover. But, in our experience, if property managers and owners were thinking ahead for long-term stability, they would not have scheduled all of their lease ends for the same month.
Seasons change, tenants don't have to.
The more I look into this phenomenon, the more I am struck by articles explaining "peak rental season" and "summer leasing season." If you own a seasonal vacation home or housing dedicated for college students - and not year-round living - these make sense. If you're looking to consistently rent out your property, it would be in your best interest to stagger your leasing cycles, saving you time, money and headaches.
While it's true that most prospective tenants tend to search for their new apartments in the warmer months, May to August, and hunker down for the winter, you should not have all of your apartments coming available at that time. Higher rental demand in these months does not guarantee your ability to keep them filled or minimize your vacant days. Instead, consider staggering move-ins and lease renewal times, for your sake as well as the incoming tenant's.
Optimizing your vacancy cycle
Here's the scenario: you own three units. All of them are signed for year-long leases, and the tenants treat the apartments like they are their own. However, all of their leases end on August 31. Now, your property manager finds themselves scrambling to advertise, screen applicants, show and fill all of these units, all at the same time.
This scenario also requires much more budgeting and saving, since you risk having all three units potentially vacant (i.e. not collecting rent) at the exact same time. Rather, if you have these lease renewal dates staggered at different months, and then one unit becomes vacant for any amount of time, the two other filled units actually help cover your vacant unit's expenses, minimizing your overall financial risk during turnover.
Now, instead picture the same three units. One's lease will end in March, the next in June, and the last one in September. Staggering the date at which all of these units will potentially become vacant allows for increased time, focus and care for each individual unit at the point of turnover.
When all three come available at the same time, you triple the work required to clean and prepare it for the new tenants, including pausing to take the appropriate time to select the best qualified applicant. When the apartments are available at different times of the year, even if only a month apart, your property manager can take the time to explore if the tenant would like to stay, and properly market the unit and engage with prospective tenants, if it is indeed becoming available.
If you're already feeling stuck in this lease renewal cycle, consider adjusting the next lease to a 6- or 18-month term.
As property managers, our priority is to keep your units filled with qualified tenants, year-round. This includes finding, screening and signing the new lease, and making that whole process as easy as possible for all parties.
What are your thoughts on "lease renewal season?" Are you currently staggering your lease renewal dates? Let us know in the comments below, or send us a message - we'd love to talk to you.