Rockville, Maryland, is a great investment opportunity for property managers. According to the U.S. Census Bureau, roughly 45% of the city's population belongs to renters. The median gross rent is nearly $2,200 per month.
In the property management business, steady rental income is essential for success. This means finding reliable tenants and locking them into a favorable lease. Some tenants will push hard for terms and conditions that only benefit them.
Read on for lease negotiation and renegotiation techniques. Explore successful lease negotiation strategies and other property management tips to maximize profit.
Lease Term
One of the hottest negotiation topics is a lease term. Many tenants want a shorter term so they can buy their forever home or move to a different location.
However, short lease terms do not help the landlord maximize profit. Instead, the landlord has to find a new tenant and can lose money if they cannot fill the vacancy. Also, they will have to incur operating expenses to clean the property, do maintenance, and advertise the vacancy again.
Property managers must remain vigilant in negotiating favorable lease terms. The standard lease term is at least one year. Longer lease terms typically indicate reliable rental income and fewer costs.
Monthly Rent
Monthly rent is another tense conversation for Rockville property management companies. Every tenant wants to pay less in monthly rent. They also do not wish for rents to increase during renegotiations.
In many cases, this is an unreasonable request in this inflationary environment. The truth is that property managers deal with rising costs on a year-over-year basis.
The cost of maintenance is on the rise. Property managers pay contractors more to maintain the HVAC system or fix a broken appliance.
Utility costs are increasing each year as well. For monthly rents that include heating or electricity, these costs fall to the landlord.
Property managers can handle higher costs in a few different ways. They can look to see how much comparable properties increase the rent each year. Another strategy is to look at government economic data to quantify rent escalation over the past year.
Other Considerations
Property managers deal with other difficult topics during negotiations and renegotiations. It is not uncommon for tenants to fight for a pet in their dwelling.
Many tenants do not take good care of the landlord's property. They can cause property damage that leads to tension between the two parties.
As a property manager, you may negotiate for additional property inspections. This way, you can monitor the housing unit's condition and make sure the tenant is following the lease agreement.
Your Guide to Lease Negotiation and Renegotiations
You are now ready to apply these lease agreement strategies. It is important to rank your priorities. If your highest priority is rental income, you may want to consider easing up on lower priorities like pet policy.
PMI Potomac has been successfully negotiating leases for more than two decades. If you need assistance with lease negotiation and renegotiations, contact us at PMI Potomac for expert advice.
