The practice of pre-leasing a Newtown rental property before it is open for occupants to move-in can be a controversial rental approach. Some people think of pre-leasing as a technique 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 good idea, there are several disadvantages that you should be aware of before trying 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 ready 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 accept 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 possible downsides to pre-leasing is that the property owner may not be able to completely guarantee that the home will be available for move-in on the agreed-upon date. Delays in repairs and renovations or other events may push back the actual move-in date, which will affect the pre-leased tenant. Additionally, this could open the property owner to legal action from the tenant if they cannot move in on the given date.
If there is huge damage, the new renter may feel tricked about the property’s condition. This can cause disappointment early on, which might set a combative tone for their entire tenancy. This is particularly valid if the issue is aggravated by broken promises or unreasonable wait times. In those kinds of circumstances, it’s not unheard of for a tenant to take legal action against a Newtown property manager.
In addition, things could become quite difficult if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have 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 pleased to find that they will not be able to move into their new home as promised, and the current tenant may also take issue with attempts to get them to leave. That might swiftly ruin a previously positive professional relationship and make future interactions with your tenant much more challenging.
Lastly, pre-leasing can limit a property manager’s ability to screen and vet potential tenants thoroughly. If you aren’t 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 appropriate time to tour the home and making sure the home is market-ready with your existing renters creates additional problems. As a result, there may be a greater risk of property damage, late rent payments, or other rental issues quite soon.
Drawbacks for Tenants
Pre-leasing has several possible pitfalls for tenants, as well. One of the most critical 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. Additionally, this may result in misconceptions or discrepancies between what was promised and what is provided.
Plus, once a deposit has been paid, a pre-lease eliminates a tenant’s bargaining power and capacity 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 living situations change or they come across a different rental option that better suits their needs or budget. Such events might easily result in a vacant rental property, which is the very thing you were probably attempting to evade with the pre-lease, to begin with.
In short, pre-leasing involves some risk for both property owners and tenants. It’s crucial to weigh the potential advantages against these disadvantages before deciding to pre-lease your rental property.
It also doesn’t hurt to seek the advice of local rental market experts, like those employed at Real Property Management Prosperity, on matters like these! Contact us online to learn more.
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