Why is a lease renewal letter important for tenants and landlords?
Lease renewal letter template and how to customize it
Next steps after sending a lease renewal letter
What if we told you it's possible to craft a lease renewal letter that makes everyone happy – even when you raise the rent?
That’s right! It’s absolutely possible, and it’s all about positioning. How do you choose pricing? How do you then position and present your lease renewal offer? How do you do this in a way that promotes clarity, builds trust, and drives the business results you’re after?
That’s what we’re covering in today’s topic: Crafting a lease renewal letter. We’ll dig into what it is, what you should include, and why an effective letter is so important for all stakeholders. We’ll also provide an example and a template you can use yourself.
A lease renewal letter is a document sent by a landlord or a property manager to notify residents that their lease is nearing its end, and to present the terms of a new lease or simply give the option to renew. It should be sent to tenants at least 60-90 days before the lease’s expiration date to give them advance notice of changes and enough time to make their own decisions.
Your lease renewal notice should give residents a clear understanding of the timeline and their options and ideally make it easy for them to renew their lease – if that’s what you and the investor want.
If you don’t want to renew or are pursuing an eviction, you will follow a different process.
At its most basic, a lease renewal letter is just a statement of the ending of an old lease and the beginning of a new one. But a really successful letter should do more than that.
The goal of a lease renewal letter should be to present any changes in a way that makes it clear to the resident why those changes are happening, and how it can be a benefit to all parties. It should smooth out the transition and position the renewal in a way that – as we said above – promotes clarity, builds trust, and drives the business results you’re after.
Are you raising rent this year? (You probably should be increasing rent each year, according to the market.) How can you position this change in a way that satisfies your investors and your residents? One example is to include a clear comparison of the cost of moving vs. renewing.
Another great way to position those changes is to outline resident benefits that are included in the lease. A resident benefits package can drive unique value for residents to renew.
These are all important considerations in framing the letter. With that in mind, here are the practical components of a lease renewal letter:
Like any formal document, you should include your name and address, and the resident’s full name and the property address at the top. Also, put the date the letter is being sent.
This is important for your records, but also to demonstrate respect and professionalism in the document.
Start with a clear statement that their current lease is coming to a close and include the exact expiration date of their current lease.
Outline the new lease agreement and terms of the lease, including the duration of the renewed lease. The resident should be able to read the letter and understand exactly what is changing from the original lease. Your goal is to help them make an informed decision based on those changes.
If you’re offering something like a Resident Benefits Package, the lease renewal letter is a great opportunity to remind residents of those benefits. Concisely and clearly outlining the value they get from the RBP is a great way to position yourself for success in the next year.
The lease renewal letter is also an excellent opportunity to introduce a resident benefits package if it’s new to your residents. Outline the valuable benefits and how it will drive better quality of life, improve financial stability, and even cut long-term costs for your residents.
Another part of the new lease terms might be a rent increase. The amount of a rental increase should be based on the market in your area. In this section, it’s extra important to add context for the resident. Include the estimated cost of moving, the market trends, and other factors that go into the rent increase.
Help them understand that you’re not fleecing them! Give enough clear context to explain that the increase ensures that you and the investor can afford to continue to offer the high-quality home and benefits they’ve become accustomed to.
A Note about Rent Increases: This is a tricky subject for a lot of property managers.
For self-managing landlords, sometimes the topic of increasing rent can feel daunting. After all, what if the resident doesn’t like the increase and decides to move? That’s a lot of cost and effort for turnaround if you just have one rental property to manage and it’s not your full-time job.
The problem, though, is that if you’re not incrementally increasing rent, one day, you’ll discover a big gap between your rental price and the market price. Then you’re faced with an even messier situation of bumping up the price by a lot.
Even among professional property managers, this question can get tricky. Some people just raise the rent by an arbitrary amount. However, the ideal approach is to evaluate the market in your area and ensure that your properties are in line with that pricing.
Remember, we’re aiming to provide clarity, build trust, and drive business results. A letter at the outset of a new lease can do all three of these things.
For tenants in a property, a lease renewal letter helps set out all the factors they need to consider when making a decision for their coming year. It helps reduce disruptions in their living situation and sets them up for success and satisfaction in their next lease term.
For the real estate investor, a renewal letter is critical to achieving any necessary new agreements, rent increases, etc. A well-composed letter will help reduce turnover (and thus turnover costs) and increase satisfaction.
And, for a property management company, a lease renewal letter gets everyone on the same page, ensures consistent rental income, and can position a new lease as a triple win for residents, investors, and property managers.
Here's how to customize the template for your own use:
Since this is a legal document, include the date and your contact information at the top. Below that, include the current tenant’s name and the address of the property in question.
Make sure to personalize the salutation as well, such as: “Dear [Tenant First Name] [Tenant Last Name].”
Write a friendly greeting that establishes the value they provide to you. This, of course, can be tweaked for different residents, depending on your experience with them. But an example is that you can thank them for being wonderful tenants and explain that this letter is to make the renewal process as easy and frictionless as possible for them. Then, to frame what's coming, explain that your company aims to make their resident experience the best it can be and list a few of the updates you're making to services or benefits, or simply review what you've been offering.
Clearly outline the end of their current lease term with the lease end date. You can include reminders on what was included with that existing lease and explain that you are happy to renew with them for another year (or whatever lease term you want).
Next, clearly outline the terms and conditions of the new lease. What is the duration of the lease? Has anything changed in what the residents are agreeing to?
This is where you’ll also include any rent increases. You can customize this for your area, but it’s good to address resident expectations here. Give context on the cost of a move and the changing cost of property/maintenance/rentals/etc. in your market, and how that affects the changes in rent amount.
Explain what you need next from the resident. Typically, all you need is for them to sign the letter and return it to you. Let them know how they can reach you with questions or requests.
Sign off with a friendly goodbye and include your signature along with your printed name and the date again.
Okay, so you’ve sent your brilliantly crafted, perfectly positioned lease renewal letter. What’s next?
Well, the resident may simply sign on the dotted line and send it back. Or they may have questions, requests, or negotiations. The third option is they may let you know they don’t intend to renew. Here’s how to deal with those scenarios.
It’s completely reasonable to expect that some residents will have questions about the letter or may even contact you with requests to make changes to the new lease terms.
Property managers should be prepared to field those requests, be open-minded to reasonable ones, but also be ready to explain if a request can’t be accommodated. Showing some flexibility is a great way to get resident buy-in, but ultimately the decision isn’t always up to you.
Be ready again with context and positioning to explain the changes in a positive way. You made the changes to benefit everyone, so make that clear when communicating with residents.
You have different options if a tenant declines to agree to the new terms. You could change the tenant’s lease terms, transition to month-to-month, etc. Or, you can proceed with a non-renewal and prepare the property for listing and getting a new resident.
This should trigger your team’s move-out processes. Request a written notice of the resident’s intent, establish a move-out date and move-out instructions, including what will happen with the security deposit. Then, your team will want to begin the process of marketing for a new tenant.
Lease renewals must comply with state and local laws, avoid discrimination, and be clear about the rights and responsibilities of both parties. If you are terminating a lease in a state that requires a “just cause,” you need to provide a legitimate reason for not renewing the lease.
The key is to know the requirements in your jurisdiction. It’s also a good idea to have a lawyer review your lease renewal template before you make it standard across your properties.
When it comes time to renew a lease, you have a unique opportunity for positioning with your residents. A lease renewal letter is your chance to reconnect on terms, update expectations, increase rent if needed, and more. And the way you compose that letter – and the way you position the changes – can make all the difference in your renewal rate and resident satisfaction.
It’s also the perfect opportunity to introduce a Resident Benefits Package and remind residents how your role is to add value to their living situation.
Use our guide above to ensure your lease renewal notice is clear, helps build trust, and helps drive business outcomes for you and your investor clients.
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Every property manager wants to minimize days on the market, and a great listing can be a critical component of accomplishing that goal. If you've spent any time looking at real estate listings, whether rentals or not, you've no doubt seen some well-done ones and ones that have five photos, three of which appear to have been taken for the TV show Hoarders. What makes a listing strong? If you're asking this question, you're off to a good start, and you're in the right place. Be thorough but concise Your listing should strike a balance between being thorough and concise, but it’s important to never leave out critical information that could lead to a negative experience down the road. First and foremost are any upfront fees, then things like pet rules, HOA considerations, and other relevancies that you don’t want a prospective resident to learn about later after they’re further into the process. 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Lists are easily consumable and where the eyes of the reader will go first if they’ve decided to skim the description instead of reading through it. In addition to the features of the home, be sure to include nearby amenities in the listing. In single-family property management, schools and school districts tend to be important. Beyond that, nearby shopping areas, outdoor spaces and parks, and distance to highway access are things that property managers have found matter to prospective residents. Don’t list the property until it is move-in ready This is an easy one to check off, but making sure a home is fully ready for a resident before it gets listed is an advantageous process for property managers. You may be tempted to list it as fast as possible, but this has risks, and the theoretical shortening of time-to-revenue may end up backfiring if a great resident moves on because the home wasn't ready when they were. Renters aren’t always proactive. They tend to be looking for properties closer to their actual desired move date than maybe they should be. Listing a property before it’s move-in ready is a great way to create a negative experience if a quality resident seeks it out and it’s not ready when they want to move in. Include a floor plan Employing a third party to create floor plan drawings isn’t a super expensive or difficult undertaking, and it’s worth your while. A floor plan helps a renter understand how the house as a whole is set up, how they might use the space, and how their stuff fits in the home. There is inexpensive software that makes this process easy, or if you’re like most property managers and crunched for time, there are third parties available. This goes back to the idea of being thorough and clear in your listing. You don’t need 100 photos of the home, but you want to tell the whole story of the house as concisely as possible. A floor plan can help you do that. Think outside the box Ask yourself how you can make your listing unique. Checking all the boxes that make a quality listing is step one, but once you’re comfortable with that, you can ask yourself how to be a little bit different and stand out in the sea of property listings. While not a property manager, Trent Miller has developed a viral video series that blends content marketing with property listing strategies. He calls it the speed tour, and it is exactly what it sounds like. @trent_miller__ It's Time For Another SPEED TOUR‼️💨 Thank you guys for all the love and support!! More videos coming soon! Looking To Buy Or Sell Real Estate?? DM ME‼️🏡 ~Price Is Estimated Down Payment~ #realestate #homesforsale #RealEstate #HomeForSale #RealtorLife #DreamHome #Property #HouseHunting #NewListing #ForSale #HomeSweetHome #InvestmentProperty #OpenHouse #LuxuryLiving #HomeBuyer #HomeDecor #HouseGoals #BuyersMarket #SellingHomes #Homeownership #RealEstateAgent #speedtour ♬ original sound - trent_miller__ Garcia Property Management adds colorful overlays to the cover photos for their listings. They don't do this for every photo, so they're still following general best practices for their photo sets for each property, but also trying to stand out within the listings thanks to some color.
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Co-founders Travis Bohling and Brandon Graham are among the most creative content marketers in the property management space. While they may be relatively new to the content side of things (Chaos and Disorder is less than a year old), they've hit the ground running with a unique video series that's both relevant and genuinely entertaining in addition to leaning hard into Facebook reels. Short video content has been trending up in social media marketing since the rise of TikTok, although it's not heavily used in the SFR property management space. Home Ladder has taken this on with sets of short, straight-to-the-point thought-leadership content. The Chaos and Disorder video series is really fun, though. Home Ladder is starting to spearhead a creative approach to content marketing that the industry could really use more of. The idea here is really to engage the inability of self-managers to be effective tenant screeners, and they've told this story with two destructive characters affably named Chaos and Disorder. A constant battle in professional property management is trying to keep ahead of the self-managing landlord as self-management tech expands their capacity. Home Ladder is keyed in on that messaging here as a play to position their professional services as more reliable and thorough, and they've done it in a way that's genuinely entertaining and relatable to anyone who has ever had a bad tenant, which is anyone who has ever managed a property. RL Property Management RL Property Management CEO Peter Lohmann is crushing it on Twitter. Executives being active in the content creation space can be a big win for companies, and RL Property Management’s Peter Lohmann is a prime example. 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This is a complete list of our software stack. This is how the magic happens & how we can calmly and effectively manage ~600 units. pic.twitter.com/aTHYAp9MwH — Peter Lohmann (@pslohmann) December 23, 2021 Grace Property Management Marc Cunningham is the YouTube king. Cunningham has been in property management for over 30 years, and his YouTube strategy is arguably the best in the game. The CEO of Grace Property Management is approaching 5,000 YouTube subscribers. Part of the value of Cunningham's channel is that you know exactly what you're going to get when you go there. His content is built with a very consistent format and length. He has over 100 videos, almost all of which are between five and ten minutes long, and address a very specific issue or question in single-family property management. Cunningham's approach is expert-forward, demonstrating that there is more than one way to win in social media and property management marketing. 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