A key step in Renewing the Lease is to perform The Lease Renewal Walk-Through. While leases can vary in duration (Examples: 12 months, 18 months, 24 months, etc.) most leases are for 12 months. All precautions have been previously taken to choose a good resident… however, can one really be sure that the resident is taking care of the property? Yes, the residents may have a good credit score, money in the bank, pay their rent on time, but how is the property looking? Most of the time the walk-through reveals that everything is going smoothly. However, no one can really know for sure up until a walk-through is completed. We complete this walk-through approximately 90 days prior to the end of the lease which allows ample time to continue with the process of renewing the lease or make a course correction and terminate the lease if needed. Here’s our process.
WHAT WE DO
During the walk-through we:
- Resident Check-In: We talk with the residents to see how they are doing and ask if they have any concerns about the property. Residents are a great resource on finding any issues that a property may have. We also ask if they have any plans on staying or moving so we can get an idea as to their plans.
- Resident Reminder: If the residentis present, we confirm that they have changed the HVAC filter(s) and if needed, remind them or where they are located and how to replace them. We also make sure they know the location of and how to turn off the water shut-off valve if needed.
- Property Spec Sheet:We fill out any information that we may be missing on the Property Spec Sheet.
- Future Projects:We notate any need for larger projects to be completed during future vacanciessuch as kitchen remodel, bathroom remodel, re-roof, new flooring, exterior painting, etc.
- Photo Documentation:We take pictures throughout the property to document the condition and share those with an owner. Most of the time there are no surprises. However, every once in a while, we run into situations where it’s in an owner’s best interest to terminate the lease as more time will only result in having the property deteriorate faster. The following are two examples of walk-throughs that we did which resulted in the owners not renewing the lase… the first one was where we found that a condominium in a high-rise building was being used to operate a gambling spot which had at least a half dozen people living in it where it was supposed to be rented only to one individual. The second one was for a household who started running a restaurant out of the property and having daily traffic come and eat at the property.
- Example:From time to time, we take over accounts where the owner either had self-managed or had a property manager in place. The following video is of a property we took where the owner had a previous property manager who did not make it a point to perform a walk-through and the residents had lived there for several years! This is not the norm, but it does go to show that it is in an owner’s best interest to have these walk-throughs performed to confirm that the property is being taken care of!
WHAT WE DON’T DO
As great as this walk-through is to share with an owner what we see, it is just as important to note what we don’t do.
- No Inspection: We are not licensed inspectors. This process is not an inspection. Instead, it is a service we provide that gives the general idea of a property's condition.
- No Maintenance Checklist: Our Maintenance Checklist is used at the time of onboarding a new property or upon a move-out. Filling out the maintenance checklist involves testing out the components of the property and requires a lot of time. The assumption is that if a component of the property is not working (Examples: garbage disposal, ceiling fan, light switch, etc.) then the resident would be submitting a service request. Given that this walk-through only takes about 20 – 25 minutes we want to respect the residents' privacy and time as utilizing the checklist can seem intrusive and unnecessary to a resident. Instead, we ask the resident if there are any maintenance items they want to bring to our attention and go over it with them to get an idea of the problem.
BACK AT THE OFFICE
Once the walk-through is completed, we will email an owner the photos and any recommendations, if applicable. One of the following two will apply:
- Lease Renewal Offer: If the property looks good and is being taken care of then we will continue with providing a Lease Renewal Offer.
- Notice of Termination of Tenancy: If the condition of the property is such where it doesn’t make sense to keep the residents, then we will advise an owner to termite the lease as of the lease end date. This provides the residents approximately 90 days to look for alternative housing. A formal notice called the Notice of Termination of Tenancy will need to be posted.
CONCLUSION
The Lease Renewal Walk-Through gives owners the confidence needed to know if it is worth presenting a resident with a lease renewal offer. It is our pleasure in assisting our owners in being comfortable real estate investors knowing their properties are being lived in responsibly.
