The way of pre-leasing a Santa Clara rental property before it is ready for move-in can be a controversial rental approach. For others, pre-leasing is regarded as a way for property owners to avoid vacancies and to ensure that they have a new tenant lined up before the current one moves out. It sounds great, but there are certain problems with pre-leasing that you have to understand before you give it a try. Let’s take a closer look at how pre-leasing works and some of the frequent disadvantages 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 take 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 first possible downsides to pre-leasing is that the property owner may not be able to completely ensure that the home will be available for move-in on the agreed-upon date. Delays in repairs and renovations or other scenarios may push back the actual move-in date, causing trouble 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 mentioned date.
If there is severe damage, the new renter may feel misinformed about the property’s condition. This can lead to displeasure early on, which could set a confrontational tone for their entire tenancy. This is especially accurate if the issue is compounded by broken promises or unanticipated wait times. In these cases, it’s not unheard of for a tenant to take legal action against a Santa Clara property manager.
Additionally, things can get very difficult if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have to address 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 happy to know 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 depart. That could quickly spoil a previously positive professional relationship and make future interactions with your tenant much more uncomfortable.
Lastly, pre-leasing can limit a property manager’s ability to screen and vet potential tenants properly. Without being 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. Ensuring the home is market-ready with your existing renters and choosing the perfect time to show it off are also challenges. This can lead to a higher risk of property damage, late rent payments, or other rental issues sooner or later.
Drawbacks for Tenants
Pre-leasing carries several potential drawbacks for tenants, as well. Among the most important of these downsides 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 lead to misinterpretations or discrepancies between what was promised and what is provided.
Besides, once a deposit has been made, a pre-lease removes a tenant’s bargaining power and ability to change their plans. If their living circumstances change 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 not be able to honor the lease they signed. These scenarios could easily end up with a vacant rental property, which is the very thing you were likely trying to prevent with the pre-lease, to begin with.
In short, pre-leasing carries a certain amount of risk for both property owners and tenants. It’s important to weigh the potential advantages against these disadvantages before deciding to pre-lease your rental property.
It also doesn’t hurt to seek the guidance of local rental market experts, like those who work at Real Property Management Southern Utah, on matters like these! Contact us online to learn more.
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