What are Lease Renewal Fees? Watch this video explainer
What are lease renewal fees?
In this short,sharp video, Krista Sharp explains what Lease Renewal Fees are and what happens if a lease renewal is not handled by your property manager.
Some people call them let fees, renegotiation fees, whatever you call them, they mean the same thing. If you’ve recently been charged a lease renewal fee I want you to give yourself a round of applause and after you do that phone your property manager and thank your property manager because your property manager is doing a really great job for you.
Let me explain what happens if the lease renewal process isn’t done right. If it’s not done right, by the time we come to the end of your lease your tenant may not have signed a lease. That means that your tenancy goes to periodic. Once it goes to periodic the tenant needs to give you 2 weeks notice if they want to move out but we still need to give them 60 days notice.
This can really leave you in the lurch if the 60 days ends up being in not such a great time of year. So in order to get you that lease renewal your property manager has probably been working tirelessly for you since 90 days prior to the end of the lease. They would have negotiated with you, negotiated with the tenant, done up the paperwork, sent the paperwork to the tenant, had numerous conversation and THEN potentially been ignored by the tenant. Then they would have had to follow the tenant up. MANY, MANY, MANY, MANY, MANY times in order to get that back in a timely fashion.
Let’s just talk about what it would cost you if your property manager did not charge you that lease renewal fee.
Chances are your property has gone into periodic, your tenant can leave giving you 2 weeks notice in not such a great time of year. You are going to be up for Advertising, Letting Fee (equivalent to one weeks rent plus gst), Loss of Rent (vacant rental property).
Conservatively it’s going to cost you a month. If your investment property is in a tenant driven marketplace where there is high vacancy this could cost you several months of rent.
If you’ve been charged a lease renewal fee you need to ring up your property manager and thank them.
They’ve kept your tenant.
They’ve added value.
They’ve saved you money.
They’ve safeguarded your yield – potentially increased your yield and increased the value of your property.