The process of pre-leasing a Chubbuck rental property before it is ready for move-in can be a questionable rental technique. Others see pre-leasing as a tool for property owners to avoid vacancies and to secure that they have a new tenant lined up before the current one moves out. It appears to be a terrific idea, but there are some problems with pre-leasing that you must be aware of before trying it out. Let’s take a closer look at how pre-leasing works and some of the frequent 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 suitable for move-in. Likely, the current tenants have yet to move out because renovations or upgrades are still being made to the home. The property owner will accept applications and possibly even sign a lease with a tenant before the move-in date.
The Disadvantages of Pre-leasing for Property Owners
One of the possible primary downsides to pre-leasing is that the property owner can only partly guarantee that the home will be available to move-in on the agreed-upon date. Delays in repairs and renovations or certain events may push back the actual move-in date, causing difficulties for the pre-leased tenant. This could also subject the property owner to legal action from the tenant if they cannot move in on the given date.
If there is massive damage, the new renter may feel tricked about the property’s condition. This can cause frustration early on, which could set an aggressive tone for their whole tenancy. This is particularly accurate if the issue is worsened by broken promises or unexpected wait times. In such scenarios, it is usual for a tenant to take legal action against a Chubbuck property manager.
In addition, things could get quite complex if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have to manage 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 may be unhappy to learn that they will not be able to move into their new home as promised, and the current tenant may object to any attempts to get them to leave. This has the potential to sever a previously positive professional relationship and make future interactions with your tenant much more complicated.
Ultimately, pre-leasing can restrict a property manager’s ability to screen and vet potential tenants carefully. If you cannot 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. Making sure the home is market-ready with your existing renters, as well as selecting the best time to view the home, are other problems. This may raise the risk of property damage, late rent payments, or other rental issues someday.
Drawbacks for Tenants
Pre-leasing has several potential difficulties for tenants, as well. One of the significant problems 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. This can also result in confusion or discrepancies between what was promised and what is provided.
What’s more, once a deposit is collected, a pre-lease removes a tenant’s bargaining power and capacity to modify their plans. If their living conditions change or they find a different rental option that better suits their needs or budget, they may not be allowed to get their deposit back and may not be able to honor the lease they signed. Such situations might easily result in a vacant rental property, which is the very thing you were likely aiming to avoid with the pre-lease, to begin with.
In short, pre-leasing entails some risk for both property owners and tenants. It’s recommended to weigh the possible benefits against these problems before agreeing to pre-lease your rental property.
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