The action of pre-leasing a Campbell rental property before it is ready for move-in can be a risky rental method. Others view pre-leasing as a technique for property owners to avoid vacancies and to make sure that they have a new tenant lined up before the current one moves out. Although pre-leasing seems excellent, there are numerous drawbacks that you should be aware of before giving it a try. Let’s take a closer look at how pre-leasing works and some of the typical challenges 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 is especially correct if the current tenants have yet to move out because renovations or upgrades are still being made to the home. The property owner will entertain 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 primary downsides to pre-leasing is that the property owner will most likely be unable to completely ensure that the home will be ready for move-in on the agreed-upon date. Delays in repairs and renovations or other issues may push back the actual move-in date, which will affect the pre-leased tenant. This could also expose the property owner to legal action from the tenant if they cannot move in on the planned date.
If there is huge damage, the new renter might have a misleading idea of the property’s condition. This may generate disappointment early on, which could set a quarrelsome tone for their whole tenancy. This is particularly obvious if the issue is deepened by broken promises or unimagined wait times. In these cases, it’s not different for a tenant to take legal action against a Campbell 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 need 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 surely will not be happy to hear that they will not be able to move into their new home as promised, and the current tenant may also not agree with attempts to get them to leave. That could swiftly sour a previously positive professional relationship and make future interactions with your tenant much more difficult.
Moreover, pre-leasing can eliminate a property manager’s ability to screen and vet potential tenants adequately. If you are not 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 finding an appropriate time to visit the property also presents difficulties. This can increase the risk of property damage, late rent payments, or other rental issues in due course.
Drawbacks for Tenants
Pre-leasing has numerous potential risks for tenants, as well. One of the major disadvantages is that pre-leasing can limit an incoming tenant’s ability to negotiate terms or amenities with the property owner, as they can’t 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.
Moreover, once a deposit has been secured, a pre-lease removes a tenant’s bargaining power and opportunity to change their plans. If their life circumstances change or they discover a different rental option that better suits their needs or budget, they may not be eligible to get their deposit back and may not be able to honor the lease they signed. These cases could easily lead to a vacant rental property, which is the very thing you were likely trying to minimize with the pre-lease, to begin with.
In short, pre-leasing bears some risk for both property owners and tenants. You have to weigh the possible benefits against these disadvantages before choosing to pre-lease your rental property.
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