When you take over the management of an occupied rental, your property manager is also taking over the current rental agreement that your tenants contracted with the previous property owner and management team. Each rental agreement has unique fees, policies and individual clauses. As a result, your Phoenix property management team may have to enforce different rental agreements across multiple properties at once. It takes time to review each rental agreement and note specific differences like grace periods and late fees.
Because of this, it is important for tenants and owners to sign the tenants up for the new rental agreement. Property managers are experts about how their own rental agreements work. By placing every tenant on the new manager’s rental agreement, you get more effective management. Your tenants also receive more consistent services.
Sometimes, the current rent amount is significantly below market value. If you want to achieve a drastic rent increase, your property management team can negotiate incremental rent increases. Ultimately, this can help the tenant and the owner. For the owner, you ultimately receive the price of market rent without having to pay the cost of turnover.
By making incremental rent increases every three to six months, you make the change less drastic and sudden for your tenant. Through incentives or rental options like setting different term lengths and lease amounts, you can encourage the tenant to sign the new rental agreement. This works especially well for tenants who are hesitant about working with a management company and do not want to move yet. If we want to bring the rent up to market value, patience is key.
When you have inherited tenants, there is a good chance that they were chosen for the rental property based on a different set of qualifying criteria. Because of this, they might not be the best fit for the new owners and management. This is something to take into consideration if your new managers want to qualify tenants based on their own screening criteria before they offer any lease renewal options.
Screening options help the new property management team ensure that the tenant has completed a criminal background check and is financially qualified. To complete this process, the tenant would have to submit an application and be approved according to the new screening criteria. While there are benefits to this approach, it may also keep some tenants from renewing. Vacancies are always expensive for landlords. We must carefully consider if asking the inherited tenant to go through the screening process is worth the risk of losing them.
Another common issue to think about is with the inherited tenants’ roommate situation. If the roommates were not properly updated or documented by the previous manager, this can lead to problems. Sometimes, tenants go through a divorce or a roommate moves out without being removed from the lease. In other cases, there is an unauthorized person living at the property. All these situations are an administrative disaster and extremely frustrating for tenants.
Property managers generally have procedures for adding and removing roommates. Unfortunately, it is fairly common for the current tenant to no longer have any contact with absent roommates. Because of this, it may be impossible to process a roommate adjustment. In these scenarios, the property manager executes a new rental agreement with the current tenants and files the accurate information.
As soon as we retain management of an occupied property, we can start our procedures for getting a new rental agreement with inherited tenants. We like to have an open dialogue with the property owner so that we can establish the new lease term and rent amount. Once we know this information, we can start renewing inherited tenants as efficiently and quickly as possible. Throughout the process, our goal is to be as consistent as possible so that you get effective results. Ideally, you want all of your tenants to be on the same rental agreement. This allows us to address problems as they come up without having to research the provisions of a previous rental agreement. This allows us to effectively manage the property. As a result, you and your tenants will enjoy the best possible customer service.