When people buy investment properties, one of the main motivations is enjoying monthly rental income from tenants. However, getting tenants to renew their leases is the only way to keep that cash flow coming.
That's one of the reasons rental property owners hire property managers. As a property manager, your goal is to find good tenants, provide customer service, maintain the property, and perform other landlord duties.
Getting tenants to renew leases takes careful planning -- and you can't afford to fumble the proverbial ball.
Here are five steps to tackle lease administration as a property manager.
1. Consider Rental Sum and Payment Terms
One of the first things to consider is how much tenants will pay and when rent is due. You need to specify these things clearly and outline the potential penalties if tenants don't live up to their end of the bargain.
Remember that not all leases are monthly. Some of them are every quarter and others are on an annual basis. An essential component of lease management is selecting a competitive rental rate and payment terms.
2. Consider Rental Rate Increases
When considering lease administration for a commercial property, you also need to know how to increase rent. It's not uncommon to raise rent when tenants enter new leases, but you must exercise caution.
You can increase rent to keep up with inflation or simply raise it by a few percentage points. You must remain competitive so that you don't inadvertently turn off tenants and cause them to look elsewhere.
3. Consider Payment Method
Owning a commercial rental property also means figuring out how you want tenants to pay their rent. So, how much and when they pay are essential, but the payment method is also necessary.
For example, you can ask them to pay by check or have them sign up for automatic billing so the money owed is taken from their bank accounts.
4. Consider Lease Start and End Dates
Lease administration also means considering the leases' beginning and conclusion dates. This information must be clearly stated on the leases in terms of months or years.
Ensure your leases include dates for when the leases come into effect, when the tenants gain access to their spaces, when rent payments begin, and when the leases end.
5. Consider Security Deposit
Another option to remember is to request that tenants pay a security deposit. You don't need to do so, but it's in your best interests. You must protect your investment when you own commercial real estate property.
After a tenant vacates a property, you must assess the space to ensure it's in good shape. You can use the security deposit to fix any damage.
Get Help With Lease Administration
You'll want to keep these things in mind when it comes to leases, but there are other things you need to know as well as a property manager.
If you have more questions about lease administration, get in touch with us at PMI North Texas. We're a property manager specializing in helping commercial property owners. For the help you need or to ask any questions, get in touch.