When a lease nears the end, many property owners wonder if they should raise the rent, keep it the same, or end the agreement altogether and look to rent to a different tenant.
Assuming you signed a 1-year lease agreement and you would like the tenant to continue renting your property, decide if you want to have the tenant sign another 1- year lease or simply let the lease expire and go to a month-to-month term. Your original lease should specify if the the lease will convert to a month-to-month tenancy. Legally, as long as the tenant continues paying you rent and you continue to accept the rent, you have a month-to-month tenancy.
If the tenant has been a good tenant, paying the rent on time, in full every month and taking care of the property, you should evaluate the local rental market and decide if you want to give the tenant a rent increase. Be sure you abide by any rent control laws in your area as you look at increasing the rent.
Make sure you factor into your decision the alternative to the tenant not accepting your rent increase and what a vacancy will cost you in the long run. To minimize the chances of your good tenant balking at your suggested rent increase, you should always keep your rent below the market rent in an increasing rental market. This way if the tenant decides to shop around and see if they can find a better deal, you want them to see that staying put is both the easiest and financially wisest thing they can do given the current market conditions.
Maybe your 1-year lease is in month 11th and you don't want to sign another lease with this tenant. Complaints of noise from the neighbors, lease violations discussed earlier or maybe a friend or family member that wants to rent the property are all acceptable reasons to ask a tenant to vacate at the end of a lease.
In fact, you don’t need to have a reason and you don’t need to give a reason for not renewing a lease. You and the tenant entered into an agreement for a 12-month lease, the time has passed and the agreement is done. 30-days prior to the lease expiration, you should properly serve the tenant a notice of termination of tenancy. If the tenant has been in the property for more than 1-year you will serve a notice giving the tenant 60-days to vacate the property.
Your lease should clearly state and the tenant should be reminded again in writing that the security deposit cannot be used to pay the last months rent. You should also serve your tenant with a right to pre-move out inspection usually 7-10 days before they vacate the property. This pre-move out inspection gives them an opportunity before they move out to remedy any damages that would be above normal wear and tear.
When you regain possession of the property, a final move out inspection with pictures should be done immediately. This move out inspection report should be closely compared to the original move-in inspection report and is the basis for all appropriate deductions from the tenant’s security deposit.
For a comprehensive guide to managing rental property, check out this resource.