The way of pre-leasing a Centerton rental property before it is ready for move-in can be a challenging rental strategy. Some people think that pre-leasing is a method for property owners to avoid vacancies and to guarantee that they have a new tenant lined up before the current one moves out. It seems to be an excellent idea, but there are some things you must know about pre-leasing before you try it. Let’s take a closer look at how pre-leasing works and some of the common issues that go with it.
How Pre-leasing Works
In the pre-leasing process, a property manager will list and advertise a rental property before it is ready for move-in. It could be that the current tenants have yet to move out or because renovations or upgrades are still being made to the home. The property owner will receive applications and potentially even sign a lease with a tenant before the move-in date.
The Disadvantages of Pre-leasing for Property Owners
One of the first probable downsides to pre-leasing is that the property owner may not be able to fully guarantee that the home will be available to move-in on the agreed-upon date. Delays in repairs and renovations or other occasions may push back the actual move-in date, which is inconvenient for the pre-leased tenant. This could also open the property owner to legal action from the tenant if they cannot move in on the approved date.
If there is a lot of damage, the new renter may feel like they lied about the property’s condition. This can make them unhappy early on, which could set a confrontational tone for their entire tenancy. This is particularly true if the issue is heightened by broken promises or unforeseen wait times. In these kinds of situations, it’s not surprising for a tenant to take legal action against a Centerton property manager.
Also, things can get extremely complex if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have to deal with the logistics of having two tenants legally contracted for the same rental home, which, as you can imagine, could quickly turn into a legal nightmare. The new tenant certainly won’t be delighted when they discover that they will not be able to move into their new home as promised, and the current tenant may also take issue with attempts to get them to leave. That could easily ruin a previously positive professional relationship and make future interactions with your tenant much more complicated.
Finally, pre-leasing can limit a property manager’s ability to screen and vet potential tenants properly. Without being able to show the unit and have the tenant physically present for a rental showing, it can be harder to feel confident in their trustworthiness and ability to fulfill the terms of their lease. Ensuring the home is market-ready with your existing renters and finding the best time to tour the home also presents challenges. This can lead to a higher risk of property damage, late rent payments, or other rental issues down the road.
Drawbacks for Tenants
Pre-leasing carries a big problem for tenants, as well. One of the main issues is that pre-leasing can limit an incoming tenant’s ability to negotiate terms or amenities with the property owner because they can’t physically see and discuss the unit during the lease signing process. This can also cause misinterpretations or discrepancies between what was promised and what is provided.
Moreover, once a deposit has been completed, a pre-lease nullifies a tenant’s bargaining power and opportunity to change their plans. If their life situations change or they get a different rental option that better suits their needs or budget, they may not be eligible to get their deposit back and may not be able to honor the lease they signed. As a result, this could easily result in a vacant rental property, which is the very thing you were likely trying to prevent with the pre-lease, to begin with.
In short, pre-leasing carries a specific measure of risk for both property owners and tenants. It’s recommended to weigh the potential pros against these cons before choosing to pre-lease your rental property.
It also doesn’t hurt to reach out to local rental market experts, like those who cooperate at Real Property Management First Choice, on matters like these! Contact us online to learn more.
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