In this episode, you’ll hear:
- What simple lease changes you can implement to make your lease work for you more
- How to communicate turnovers with tenants
- Why you need to confront the painful parts of business
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Outgoing Tenants → Turnover Best Practices
- Design Your Lease Term Make Turnovers Easier
We set our leases to run 1 year minus one week that way we have time to get the place painted, professionally cleaned, and any repairs made. We explain this upfront to tenants at lease signing and explain this is how we are able to give them the keys to a clean, fresh space on time and won’t be in their hairs trying to do this as they move it. It’s never been an issue. Plus, tenants typically move out a bit before the last day of their lease anyway.
- Don’t Communicate in Loosey-goosey Terms about Showings
Tenants naturally don’t like showings. It doesn’t make them bad people. It makes them human. However, we ease them into this reality early on. We point out during showings, before they even become our tenant, that the place they are seeing is occupied and our tenants all work with us to allow new tenants to see the place well in advance of their lease starting. If someone irks at this, then it’s a major red flag. We also make it clear come renewal time that if they chose not renew, showings will be happening. It’s stating what may be obvious but it gives the tenants a sense of agency in the process.
- Eliminate Short Notice Times for Renewal In Your Lease
I don’t know who came up with 30-day notice for renewal but we threw that lease term in the trash a long time ago. We require 90-day notice for renewal so that we have adequate time to market the place and avoid vacancies. We also check in with our tenants 30 days out from the renewal date to remind them that it’s coming. We were surprised to find that we actually get a ton or responses at that 120-day mark about who is or isn’t staying and man does that feel good!
- Failure to properly document condition
Some landlords document the property condition a week or so out from the end of the lease to give the tenant the opportunity to fix the place themselves. Our tenant class isn’t going to do that so we don’t bother. We try to do a final walkthrough with tenants at the time of the turnover of the keys. We’ll mark up what needs to be cleaned or fixed and let them know we’ll just take it from their security and will send a breakdown shortly.
Incoming Tenants → Turnover Best Practices
- Don’t Assume Condition is a Given
Just because a unit is cleaned up and keys turned over to the tenant doesn’t mean that place was brand new. What we like to do is tell the tenants they have a week to let us know if anything is wrong so we don’t hold it against them at the end of the year. No one is more thorough than a tenant in that position in finding every little thing. Most of the stuff we won’t hold them to because it’s just normal wear and tear of the building and we just let them know we made a note of it that they didn’t do it. Other things we will go ahead a repair (like a stuck window).
- Don’t Give A Tenant Keys Early
It’s tempting to be kind and turn over the keys early. Problem is they aren’t your tenant when they move in. You could be official and whip up an addendum. I find it’s not worth it and often causes more issues than its worth. Sometimes tenants won’t bother putting utilities in their name until the lease date starts and you end up paying for AC for their boxes.
- Don’t Hold Too Much of the Tenant’s Money in Escrow
“First, last, and security” isn’t law. It’s a jingle. States all have varying escrow policies. Know them. Love them. Put them in your leases and for g-ds sake follow them. The penalties for violating security deposit and escrow laws are stiff. (And you know I gotta tell you that your LLC and insurance won’t matter here.)
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