The approach of pre-leasing a Layton rental property before it is open for occupants to move-in can be a controversial rental tactic. Some people believe in pre-leasing as a way for property owners to avoid vacancies and make sure they have a new tenant lined up before the current one moves out. Even though pre-leasing seems like a great idea, there are numerous drawbacks that you should be aware of before doing it. Let’s take a closer look at how pre-leasing works and some of the usual drawbacks 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 open for move-in. This can be because 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 initial potential downsides to pre-leasing is that the property owner cannot confirm that the home will be available for move-in on the agreed-upon date. Delays in repairs and renovations or other scenarios may push back the actual move-in date, which will affect the pre-leased tenant. Also, this could subject the property owner to legal action from the tenant if they cannot move in on the specified date.
If there is significant damage, the new renter may feel tricked about the property’s condition. This can result in disappointment early on, which might set a combative tone for their entire tenancy. This is especially valid if the issue is aggravated by broken promises or unnecessary wait times. In those kinds of situations, it’s not unusual for a tenant to take legal action against a Layton property manager.
Furthermore, things could get tricky if the current tenant changes their mind about moving out – even after giving official notice. The property owner may need to handle 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 happy to find that they will not be able to move into their new home as promised, and the current tenant may also protest with attempts to get them to leave. That might quickly destroy a previously positive professional relationship and make future interactions with your tenant much more difficult.
At last, pre-leasing can affect a property manager’s ability to screen and vet potential tenants thoroughly. If you are not 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. Finding an ideal time to visit the home and making sure the home is market-ready with your existing renters adds other challenges. As a result, there may be an increase in the risk of property damage, late rent payments, or other rental issues in the future.
Drawbacks for Tenants
Pre-leasing has several potential problems for tenants, as well. One of the most serious issues is that pre-leasing can limit an incoming tenant’s ability to negotiate terms or amenities with the property owner, as they cannot physically see and discuss the unit during the lease signing process. What’s more, this may result in contradictions or discrepancies between what was promised and what is provided.
Also, once a deposit is received, a pre-lease diminishes a tenant’s bargaining power and ability to alter their plans. They might not be able to get their deposit back and might not be able to honor the lease they signed if their life conditions change or they discover a different rental option that better suits their needs or budget. Such events might easily end up with a vacant rental property, which is the very thing you were probably attempting to avoid with the pre-lease, to begin with.
In short, pre-leasing involves some risk for both property owners and tenants. It’s important to weigh the potential advantages against these difficulties before deciding to pre-lease your rental property.
It also doesn’t hurt to seek the opinion of local rental market experts, like those working at Real Property Management Northern Utah, on matters like these! Contact us online to learn more.
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