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The Disadvantages of Pre-leasing Rental Properties

Online Application for a Keller Pre-lease Rental The way of pre-leasing a Keller rental property before it is ready for move-in can be a contentious rental technique. Some individuals believe that pre-leasing is a strategy for property owners to avoid vacancies and to ensure that they have a new tenant lined up before the current one moves out. Even though pre-leasing appears to be a terrific alternative, there are a few things you should be informed about before embarking on this path. Let’s take a closer look at how pre-leasing works and some of the problems 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 eligible for move-in. Perhaps it’s 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 take applications and might 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 cannot guarantee that the home will be ready for move-in on the agreed-upon date. Delays in repairs and renovations or other circumstances may push back the actual move-in date, resulting in a headache for the pre-leased tenant. This could also open the property owner to legal action from the tenant if they cannot move in on a specific date.

If there is serious damage, the new renter may feel misled about the property’s condition. This can lead to displeasure early on, which could set an aggressive tone for their entire tenancy. This is particularly accurate if the issue is compounded by broken promises or groundless wait times. In such cases, it’s not unheard of for a tenant to take legal action against a Keller property manager.

Furthermore, things may get quite problematic if the current tenant changes their mind about moving out – even after giving official notice. The property owner may be required 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 certainly won’t be glad to hear 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 could instantly destroy a previously positive professional relationship and make future interactions with your tenant much more problematic.

Finally, pre-leasing can lessen a property manager’s ability to screen and vet potential tenants appropriately. If you can’t 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 and choosing a sufficient time to show the home also involves issues. This can result in a higher risk of property damage, late rent payments, or other rental issues over time.

Drawbacks for Tenants

Pre-leasing brings multiple potential drawbacks for tenants, as well. One of the biggest issues is that pre-leasing can limit an incoming tenant’s ability to negotiate terms or amenities with the property owner because they want to physically see and discuss the unit throughout the lease signing process. This can also bring about misconceptions or discrepancies between what was promised and what is provided.

Also, once a deposit has been made, a pre-lease removes a tenant’s bargaining power and opportunity to modify their plans. If their goals shift or they locate a different rental option that better suits their needs or budget, they may not be able to get their deposit back and may my unable to honor the lease they signed. Such scenarios could soon 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 involves some risk for both property owners and tenants. It would be best to weigh the potential advantages against these drawbacks before agreeing to pre-lease your rental property.

It also doesn’t hurt to get guidance from local rental market experts, like those who work at Real Property Management Meridian, on matters like these! Contact us online to learn more.

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