The practice of pre-leasing an Austin rental property before it is ready for move-in can be a contentious rental method. Some individuals view pre-leasing as a method for property owners to avoid vacancies and to guarantee that they have a new tenant lined up before the current one moves out. Even though pre-leasing seems like a good concept, there are several drawbacks to consider before doing it. Let’s take a closer look at how pre-leasing works and some of the common downsides 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. 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 consider applications and may even sign a lease with a tenant before the move-in date.
The Disadvantages of Pre-leasing for Property Owners
One of the first potential downsides to pre-leasing is that the property owner may not be able to fully ensure that the home will be ready for move-in on the agreed-upon date. Delays in repairs and renovations or other circumstances may push back the actual move-in date, causing inconvenience 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 agreed-upon date.
If there is massive damage, the new renter may feel fooled about the property’s condition. This can result in frustration early on, which could set a confrontational tone for their entire tenancy. This is certainly relevant if the issue is intensified by broken promises or surprising wait times. In such cases, it’s not unusual for a tenant to take legal action against an Austin property manager.
Moreover, issues might become problematic 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 may be disappointed 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 leave. That could rapidly damage a previously positive professional relationship and make future interactions with your tenant significantly more challenging.
Lastly, pre-leasing can impede a property manager’s ability to screen and vet potential tenants adequately. 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. Confirming the home is market-ready with your existing renters and arranging a convenient time to show the home also includes difficulties. This can increase the risk of property damage, late rent payments, or other rental issues that may arise.
Drawbacks for Tenants
Pre-leasing carries several potential downsides for tenants, as well. Among the most crucial of these problems 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 cause mistakes or discrepancies between what was promised and what is provided.
In addition, once a deposit has been collected, a pre-lease reduces a tenant’s bargaining power and freedom to alter their plans. If their living conditions change or they locate a different rental option that better suits their needs or budget, they may not be allowed to get their deposit back and may not be able to honor the lease they signed. Such factors could easily lead to a vacant rental property, which is the very thing you were aiming to prevent with the pre-lease, to begin with.
In short, pre-leasing involves a degree of risk for both property owners and tenants. It’s vital to weigh the possible pros against these cons before agreeing to pre-lease your rental property.
It also doesn’t hurt to consult local rental market experts, such as those working at Real Property Management Advisors, on matters like these! Contact us online to learn more.
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