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The Disadvantages of Pre-leasing Rental Properties

Online Application for a North Hollywood Pre-lease Rental The method of pre-leasing a North Hollywood rental property before it is ready for move-in can be a controversial rental approach. For some, pre-leasing is regarded as a way for property owners to avoid vacancies and to safeguard that they have a new tenant lined up before the current one moves out. It sounds interesting, but there are some things you should understand about pre-leasing before you give it a try. Let’s take a closer look at how pre-leasing works and some of the common difficulties 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 could occur because the current tenants have yet to move out. After all, renovations or upgrades are still being made to the home. The property owner will take applications and might even sign a lease with a tenant before the move-in date.

The Disadvantages of Pre-leasing for Property Owners

One of the possible downsides to pre-leasing is that the property owner may not be able to fully safeguard that the home will be ready for move-in on the agreed-upon date. Delays in repairs and renovations or other events may push back the actual move-in date, which is bothersome for the pre-leased tenant. This could also subject the property owner to legal action from the tenant if they cannot move in on the confirmed date.

If there is significant damage, the new renter may feel misinformed about the property’s condition. This can make them unhappy early on, which could set a confrontational tone for their entire tenancy. This is certainly the case if the issue is compounded by broken promises or unanticipated wait times. In these types of circumstances, it’s not unusual for a tenant to take legal action against a North Hollywood property manager.

Also, things can get very challenging if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have to deal 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 certainly won’t be glad to hear 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 move out. That could easily damage a previously positive professional relationship and make future interactions with your tenant much more complex.

In the end, pre-leasing can limit a property manager’s ability to screen and vet potential tenants properly. If you can’t 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. Guaranteeing the home is market-ready with your existing renters and finding an acceptable time to visit the house also presents problems. This can cause a higher risk of property damage, late rent payments, or other rental issues eventually.

Drawbacks for Tenants

Pre-leasing carries several possible downsides for tenants, as well. Among the most critical of these 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 initiate confusion or discrepancies between what was promised and what is provided.

What’s more, once a deposit has been paid, a pre-lease eliminates a tenant’s bargaining power and ability to amend their plans. If their priorities change or they find a different rental option that better suits their needs or budget, they might not be able to get their deposit back and may not be able to honor the lease they signed. Such situations could easily result in a vacant rental property, which is the very thing you were probably attempting to avoid with the pre-lease, to begin with.

In short, pre-leasing transmits a certain amount of risk for both property owners and tenants. It’s advisable to weigh the possible positives against these negatives before opting to pre-lease your rental property.

It also doesn’t hurt to seek the advice of local rental market experts, like those employed at Real Property Management Vision, on matters like these! Contact us online to learn more.

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