The practice of pre-leasing a Bronx rental property before it is ready for move-in can be a contentious rental technique. For others, pre-leasing is seen as a strategy for property owners to avoid vacancies and to guarantee that they have a new tenant lined up before the current one moves out. It seems great, but there are several drawbacks to pre-leasing that you should know before giving it a shot. Let’s take a closer look at how pre-leasing works and some of the typical 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 available for move-in. It’s possible that the current tenants have yet to move out because renovations or upgrades are still being made to the home. The property owner will take 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 initial possible downsides to pre-leasing is that the property owner may only partially ensure that the home will be open to move-in on the agreed-upon date. Delays in repairs and renovations or some scenarios may push back the actual move-in date, resulting in difficulty for the pre-leased tenant. This could also open the property owner to legal action from the tenant if they cannot move in on the appointed date.
If there is significant damage, the new renter may be deceived about the property’s condition. This can result in disappointment early on, which could set a harsh tone for their whole tenancy. This is particularly the case if the issue is worsened by broken promises or unfulfilled wait times. In such cases, it is not uncommon for a tenant to take legal action against a Bronx property manager.
Furthermore, things might become very problematic if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have to cope with 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 disappointed to discover 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 might easily damage a previously positive professional relationship and make future interactions with your tenant much more complex.
Lastly, pre-leasing can restrict a property manager’s ability to screen and vet potential tenants appropriately. If you are unable 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. Making sure the home is market-ready with your existing renters and choosing the right time to view the home are also issues. This can increase the risk of property damage, late rent payments, or other rental issues in the future.
Drawbacks for Tenants
Pre-leasing has several potential drawbacks for tenants, as well. One of the significant disadvantages 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 misconceptions or discrepancies between what was promised and what is provided.
Furthermore, once a deposit has been submitted, a pre-lease removes a tenant’s bargaining power and capacity to change their plans. If their living situations change or they discover a different rental option that better suits their needs or budget, they may not be able to get their deposit back and may not be able to honor the lease they signed. Such circumstances might easily result in a vacant rental property, which is the very thing you were likely attempting to prevent with the pre-lease, to begin with.
In short, pre-leasing entails some risk for both property owners and tenants. It’s advisable to weigh the possible rewards against these downsides before agreeing to pre-lease your rental property.
It also doesn’t hurt to get the counsel of local rental market experts, such as those employed at Real Property Management New York Gold, on matters like these! Contact us online to learn more.
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