Non-renewing Your Tenant? Don’t Make This Mistake.

Depressed couple holding broken heart

Non-renewing Your Tenant? Don’t Make This Mistake.

Sometimes it is necessary to non-renew a tenant when the lease is approaching expiration instead of offering them a new lease. There are many reasons that this may be necessary such as:

  • Tenant has been difficult to work with
  • Tenant has had multiple late payments during their tenancy
  • Tenant has had one lease infraction after the next
  • Tenant is causing damage to the property or an unreasonable amount of wear and tear

Regardless of the reason, a notice of non-renewal needs to be issued to the tenant by the notice deadline listed in the lease agreement. This is commonly 30 or 60 days and provides advanced warning that they need to start looking for a new place to live due to the landlord unwillingness to extending a new lease.

As a property management company servicing over 100 properties, we sometimes find ourselves in this situation where a non-renewal is warranted. If the role was reversed and it was the tenant giving us a 60-day notice to vacate, we would begin advertising the property right away and conducting showings to new prospective renters during the remaining months of the lease. It’s to the landlords benefit in that case to take advantage of the time remaining on the current lease to minimize the vacancy.

So why not start showing the property immediately after you give notice to your tenant that you’re not renewing them? Don’t make this mistake! At Integrity Realty & Management, if we’ve served the tenant with a non-renewal, our policy is to not show the property until after the out-going tenant has fully moved out, we’ve completed a move-out inspection, and we’ve ensured the property is presentable for showing. Here’s why…

The Parable of the Live-in Boyfriend/Girlfriend

I use the example of a boyfriend and girlfriend who live together. The boyfriend breaks up with girlfriend but since they still have two months left on their lease, they agree to continue living together as roommates. All seems fine until the now ex-boyfriend starts going on dates with new girls and brings them home to parade them in front of his ex-girlfriend. She naturally does not respond positively to this.

The same thing happens with out-going tenants who you’ve non-renewed. You’ve told them that, in essence, you’re breaking up with them and they have to move out at the end of the lease, but then proceed to parade new potential tenants in front of them. It’s the same thing as saying, “You’re not good enough to rent from me anymore, but these people might be.”

This showing process is a complete waste of time. The outgoing tenant, being rightfully ticked off, will make zero effort to make the house look nice, will sit on the couch and jeer at the new tenants making them feel super uncomfortable, or will bad mouth you, your property manager, or the house during the entire showing.

The house undoubtably will not rent, and when they finally do move out making it easier to show, the online ads will display that the property has been on the market for 30+ days which makes prospective renters think there must be something wrong with it. Now that the property finally presents well,  it will hardly get any showings as a result, extending the vacancy even further.

I’ve found the best course of action in this case is to just wait for the out-going tenants to move out, get the house ready, and then list it. It will most likely rent quickly because it will show well, and it will attract a better quality tenant as a result.

So the next time you non-renew a tenant, resist the impulse to list the property immediately. Take a breath, stay calm, and know that by waiting you will end up renting the property faster and to a better tenant.

Ben Parham on EmailBen Parham on Linkedin
Ben Parham
Ben Parham is the President and Managing Real Estate Broker of Integrity Realty & Management, Inc., a cutting edge real estate sales and property management brokerage operating throughout the Greater Denver Area. Ben also served as the 2018 President of the Denver Chapter of the National Association of Residential Property Managers (NARPM) and has served as a NARPM National Southwest RVP Ambassador. Ben is a U.S. Navy veteran where he served as a Cryptologic Technician (Technical) and was awarded the Joint Service Achievement Medal, two Navy Achievement Medals, and a Good Conduct Medal. He has a Bachelor of Science in Business Administration and is licensed as a real estate broker in both Colorado and Florida.