When it comes to rental properties and leases, negotiating lease and rent terms is all about finding a middle ground that everyone can agree with. Much like many aspects of managing a rental property, it’s about finding a solution. On one hand, you want to find the best terms for you and your investment. On the other, you have to cater to the needs of your tenant, too. Finding the win-win for both sides can be challenging, but not impossible. To help you do so, here are a few tips for negotiating lease and rent terms with your Colorado Springs tenants.
The Art of Negotiating Lease and Rent Terms
Know Your Minimum
Everyone has a bottom line, their break-even point. Knowing your minimum is critical when negotiating lease and rent terms. Make sure to do your research to know exactly how low you can go in the event your tenants want to negotiate. This can include your mortgage costs, management costs, expenses, etc. After all, you don’t want to lose money.
Know The Local Market
Rent prices in any given market at any given time fluctuate. They’re not always the same year-over-year. This means that when deciding what rent to charge, rental property owners need to research what similar properties are renting for in their area every time a vacancy occurs. Don’t fall into the mentality that just because you got one rate last time, you’ll be able to ask the same this time around. There are also benefits to keeping current tenants by raising the rent just below market or increasing it only slightly from the term before to avoid dealing with a vacancy.
Communication is Key
Stay on top of negotiations by communicating clearly and well in advance before the lease expires. This gives your tenants ample time to decide without stressing them out. Good communication builds trust, which also helps incentivize good tenants to stay. It shows you care and helps you avoid scrambling to get the lease finalized or begin searching for new tenants.
Stay Flexible and Compassionate
We all know times are tough right now. For many, money is tight and budgets are strained. For that reason, it’s important to be flexible where you can when negotiating lease and rent terms for your Colorado Springs rental. You want to keep good tenants in your home while maximizing your profits where you can. But be ready to compromise. Offer multiple options to your tenants where you can, such as offering a longer lease for a lower rate. Sometimes lowering the price by as much as $25-50 can make a big difference for your tenants. Be flexible. Be human. But know your bottom line.
Do Your Part
One of the best negotiating tools a rental property owner has is following through with their part. From communicating efficiently to handling maintenance and tenant requests properly, holding up your end of the bargain shows you’re serious about the service you offer and that you care. Keep your home well-maintained. Offer upgrades when possible to help incentivize your tenants to stay. A little pride in your investment goes a long way and helps your tenants to do the same.
Write Things Down
Documentation is key to any part of managing a rental property, negotiations included. After speaking with your tenants about what terms are on offer, send a follow-up email to maintain a paper trail. This helps to avoid any discrepancies or miscommunications down the road. Once terms have been agreed upon, draft the lease and send it to be signed as soon as possible. Make sure to have any changes to your lease reviewed by an attorney to avoid any potential legal issues, as well. You can also do this by having your lease reviewed regularly to keep up to date with any changes that may have occurred.
Keep Things Professional
Negotiating can sometimes lead to conflict. While you can’t control your tenant’s reactions, you can control your own. Stay professional and avoid any angry outbursts and accusations. Be the calm presence in the room, set the tone, and remember that keeping things professional can often lead to better resolutions than losing your cool.
Know When To Say No
Part of the goal of successfully managing a rental property is finding and keeping good, qualified tenants. However, on the other side of that coin, you have profit goals to maintain as well. While negotiating and being flexible offer great benefits, so, too, does knowing when to say no and walk away. Don’t set yourself up to fail by agreeing to terms that cost you in the long run. Set and keep proper boundaries. Sometimes the best solution is to part ways and find new tenants.
Negotiation is an art; it’s a critical part of effective communication and a skill that can sometimes feel uncomfortable to learn and practice. When it comes to negotiating lease and rent terms with your Colorado Springs tenants, be flexible and professional, but remember first that your rental property is a business. Invest in it, maintain it, and do what you can to improve the odds of increasing your goals in the long term.
And if negotiating with tenants sounds nauseating or just too hard, consider hiring Real Property Management Colorado to do it for you! Our expert leasing team knows the rental market like none other. It’s all we do! Give us a call or contact our office today to learn more about our property management services, tenant communication included!
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