The Pros & Cons of Pre-Leasing Your Austin Rental Home

There is no question that the Austin area real estate market is on fire! But what does that mean in terms of the rental market? How does it affect leasing? Is pre-leasing a good idea? Will it benefit me, the owner? We have made the decision to halt pre-leasing. Please read below for more information on our decision behind this.

Cost of Pre-Leasing

While zero vacancy time sounds ideal in a perfect world, things don’t always go as planned. A number of issues can arise with the potential to be disastrous and costly.

• Vacating Tenant Delays: Delays happen. You sign a new lease of an occupied property. The existing tenant has an emergency and can't be out on time, you now have a hold over tenant and a new lease has started and started off in a bad way. Your previous tenants will pay rent and they are in violation of the lease but they are stuck in the property for a few more days. Your new tenants have nowhere to go, they can’t move in on time, what do you do?
• Vendor Delays: The vendor gets sick, or there is a delay in supplies, it happens all the time. Due to the quick move in, we can’t get anyone out the same day. The lease starts tomorrow and you can’t get the property made ready. You have a tenant scheduled to move in and for delays beyond anyone's control the property is not move in ready, what do you do?
• Unmet Expectations: Everything went well, tenants moved out as scheduled, and the vendor completed the make ready. The new tenants show up with a moving truck and refuse to move in. They say the property is not in the condition they were expecting it to be in.Things were hidden by furniture or they expected the property to be completely painted. They thought that the cool water cooler was staying (it belonged to the outgoing tenants). They didn’t get a good look at the floor because the outgoing tenants 9X12 area rug covered the worn out flooring. They are not happy with the property now that they can fully see it, what do you do?
• Bad Showings: Your existing tenants do not have a vested interest in showing the property. They are in the process of moving out, the house is in shambles, there are boxes everywhere. Sometimes the property could have pet odors. The potential applicants may have pet aversions so they immediately cross your property off of their list for fear the pet hair or smell may remain. As a result of bad or blocked showings, the number of days on market climbs. After a while any potential applicants see a large number of days on market and immediately think, “This home has been on the market too long, something must be wrong with it” Then they don’t even schedule a showing and your days on market continue to rise and you begin a cycle of price reduction to start generating more interest and before long, you are actually losing money for all the price reductions you've had to make to get attention.

Leasing Move-In Ready Homes

These above problems are all avoidable! The best way to avoid all of the above is to Lease vacant move-in ready homes!

What You See Is What You Get!

• There are no vacating tenant delays: The property is marketed AFTER the tenants have vacated and the make ready is done. It will be advertised with an immediate move in date. If someone walks the property on a Monday, they can move in as early as Friday! You won’t have to worry about running into the issue of a delayed move out and a new tenant stuck with nowhere to go.
• There are no Vendor delays: There is no question if the property will be ready. The patch and paint was done before going on the market. Floors are clean. The yard is trimmed and manicured. The new fixtures had time to come in and are now installed. It is ready for immediate move in!
• There are no unmet expectations: There is no upset when the moving truck shows up. The carpet, floors, paint, is all exactly the same as it was when they viewed the property the first time. They loved it then and they love it now! The move in is smooth!
• No bad showings: The property shows well because, What you see is what you get! You don’t have to worry that showings are blocked, denied or canceled due to the pandemic. The property is completely made ready so it shows well! You have truly put your best foot forward and it even reduces the days on market by being RENT READY!

Fear from the Covid-19 Pandemic changed so many aspects of our lives, open everyone’s eyes to a different take on the world including the way we work and do business. We had no choice but to put preleasing on Hold and see many benefits in doing so! So many of your problems go away by avoiding preleasing!