Skip to Content

The Disadvantages of Pre-leasing Rental Properties

Online Application for a Santa Clarita Pre-lease Rental The practice of pre-leasing a Santa Clarita rental property before it is ready for move-in can be a debatable rental technique. Some people think that pre-leasing is a way for property owners to avoid vacancies and to ensure that they have a new tenant lined up before the current one moves out. Although pre-leasing appears to be a great option, there are a few things you should know before trying it. Let’s take a closer look at how pre-leasing works and some of the 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 suitable 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 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 first possible downsides to pre-leasing is that the property owner is unable to fully guarantee that the home will be available for move-in on the agreed-upon date. Delays in repairs and renovations or other things may push back the actual move-in date, causing a problem for the pre-leased tenant. This could also open the property owner to legal action from the tenant if they cannot move in on a specific date.

If there is serious damage, the new renter may feel misled about the property’s condition. This can lead to dissatisfaction early on, which could set an aggressive tone for their entire tenancy. This is especially true if the issue is compounded by broken promises or unanticipated wait times. In such situations, it’s not unheard of for a tenant to take legal action against a Santa Clarita property manager.

Also, things may become extremely complicated if the current tenant changes their mind about moving out – even after giving official notice. The property owner may have to take care of 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 pleased 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 instantly ruin a previously positive professional relationship and make future interactions with your tenant much harder.

At last, pre-leasing can constrain a property manager’s ability to screen and vet potential tenants appropriately. 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. Making sure the home is market-ready with your existing renters and selecting an appropriate time to show the home also involves difficulties. This can result in a higher risk of property damage, late rent payments, or other rental issues from this day forward.

Drawbacks for Tenants

Pre-leasing brings multiple potential problems for tenants, as well. One of the biggest problems is that pre-leasing can limit an incoming tenant’s ability to negotiate terms or amenities with the property owner because they need to physically see and discuss the unit during the lease signing process. This can also cause miscommunications or discrepancies between what was promised and what is provided.

Furthermore, once a deposit has been compensated, a pre-lease withdraws a tenant’s bargaining power and opportunity to change their plans. If their priorities change or they see a different rental option that better suits their needs or budget, they may not be able to get their deposit back and may not be able to honor the lease they signed. Such cases could quickly lead to a vacant rental property, which is the very thing you were likely seeking to evade with the pre-lease, to begin with.

In short, pre-leasing involves some risk for both property owners and tenants. It would be best if you weighed the potential advantages against these drawbacks before deciding to pre-lease your rental property.

It also doesn’t hurt to communicate with local rental market experts, like those who work at Real Property Management Traditions, on matters like these! Contact us online to learn more.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details