The method of pre-leasing an Oakland rental property before it is suitable for move-in can be a controversial rental tactic. Some regard pre-leasing as a technique for property owners to avoid vacancies and to ensure that they have a new tenant lined up before the current one moves out. While the concept is tempting, there are numerous pitfalls to pre-leasing that you must be aware of before getting started. Let’s take a closer look at how pre-leasing works and some of the common 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 prepared for move-in. This could 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 accept 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 initial possible downsides to pre-leasing is that the property owner may not be capable of fully confirming 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, leading to interruption for the pre-leased tenant. This could also subject the property owner to legal action from the tenant if they cannot move in on a certain date.
If there is substantial damage, the new renter may feel deceived about the property’s condition. This can cause anger early on, which could set an argumentative tone for their entire tenancy. This is doubly the case if the issue is aggravated by broken promises or unforeseen wait times. In such conditions, it’s not unusual for a tenant to take legal action against an Oakland property manager.
Moreover, things might become quite tough if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have 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 will be upset if they find out that they will not be able to move into their new home as promised, and the current tenant may also be resistant to attempts to get them to leave. That could swiftly damage a previously positive professional relationship and make future interactions with your tenant even more complicated.
In the end, pre-leasing can impede a property manager’s ability to screen and vet potential tenants comprehensively. If you’re 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. Ensuring the home is market-ready with your existing renters and picking a suitable time to tour the home also creates problems. This can bring about a higher risk of property damage, late rent payments, or other rental issues afterward.
Drawbacks for Tenants
Pre-leasing carries several potential difficulties for tenants, as well. Among the most important 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 bring about misunderstandings or discrepancies between what was promised and what is provided.
In addition, once a deposit is given, a pre-lease eliminates a tenant’s bargaining power and the chance to modify their plans. If their living situations change or they discover a different rental option that better suits their needs or budget, it’s possible that they won’t be able to get their deposit back and may not be entitled to honor the lease they signed. If this happens, it could easily result in a vacant rental property, which is the very thing you likely intended to avoid with the pre-lease, to begin with.
In short, pre-leasing conveys a certain amount of risk for both property owners and tenants. It’s crucial to weigh the potential benefits against these drawbacks before agreeing to pre-lease your rental property.
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