In an effort to better control turnover at your properties — and the related turnover expenses including but not limited to lost income, maintenance time, move out bills to generate, apartments to market, management time, ads to post, applications to screen, paperwork to complete, apartments to show, vendors to schedule, locks to change, replacements to coordinate) , here is some information to consider regarding lease renewals.
An apartment was recently rented. We’d like to get the new resident to stay for a longer period of time and we would like the apartment to stay occupied and producing revenue. Providing exceptional service each and every day to the resident pays dividends in terms of improving your chances of securing a lease renewal in the future.
In addition to completing yearly recertification paperwork (affordable housing), an important part of the anniversary of each tenancy involves securing signatures on new leases when the old lease expires.
The goal for each property is to have no more than 10%-15% of households on a month-to-month rental agreement (including any and all expired leases) at any given time. The remaining households should be on leases where the expirations are spread out over the year. For example:
- 72 unit property should have no more than 7 month-to-month households (10%); and,
- The balance of the apartments (65) should be a mix of vacancies (hopefully no more than 5% and possibly less) and leases that expire as evenly as possible over the next 12 months.
If you are wondering how lease expiration dates and month-to-month concentrations at your property look at any given time, print an AMSI report and take a look:
- Powersite
- Management Reports
- Lease Expiration by Month
- Management Reports
The length of leases that you are required to offer can be based on program restrictions. For Tax Credit properties only, a minimum lease term is generally 6 full calendar months. If your property has HOME, USDA / Rural Development, or HUD support, 12 month leases are very likely required.
How can you succeed in encouraging households to sign a lease? Here are a few ideas that have come in from your peers:
- Provide exceptional service throughout the prior lease term so the resident is already pre-disposed to remaining a satisfied resident for another lease term
- Offer a complimentary service such as a free carpet shampoo (with supervisor approval)
- Generally, a lease gives the resident the protection of a specific rent obligation for the next 12 months. Note that some restrictions apply though this is generally a true statement.
- Add an upgrade to an apartment for a lease renewal. This might include an upgraded light fixture, fresh painting of a room, or other updates. Talk with your supervisor to find out what works for your budget and your community as standards to vary from property to property.
Questions are always welcome, and your attention to details such as this can make the difference between strong management and exceptional management of your community.
