In rental property management, the ideal “win-win” situation would be when both the tenant and the landlord are happy. It may seem impossible to do, but as a property owner, there are certain practices that you can keep in mind to keep both parties in harmony.
Keeping your tenants is essential to your rental venture’s success. Your residents are like your business partners — their happiness is the key to your income. By maintaining positive relations with your tenants, you can ultimately reduce vacancies and increase tenant retention.
What is Tenant Retention?
Tenant retention measures the number of tenants that are leasing the property for several rental periods. Many landlords and property managers consider this metric as a determinant of their rental business’s success. This is because retaining a tenant is less costly than replacing them. Tenant turnover can cost anywhere between $1,000 to $5,000, which is why property owners aim to prevent it from happening.
Why is Tenant Retention Important?
Tenant turnover can be costly. Not only do property owners risk losing profits from unoccupied properties, but they also have to cover the costs for cleaning, screening prospective tenants, drafting new lease agreements and contracts, and many more.
Additionally, tenants moving out is a sign that the property is in dire need of repairs. Property owners will have to spend thousands of dollars on upgrades before the property can be listed on the market again.
When tenants choose to stay, it indicates that your tenants are happy with both the property and management. This is why it is essential to focus on tenant retention, as it ensures your rental business’s success, and ultimately, your happiness.
What are the Strategies to Improve Tenant Retention?
As a property owner, you will benefit from paying attention to the needs of your tenants. Below are some effective ways to improve tenant retention:
#1 Respond Quickly
Your tenant’s patience will only last so long. If you take days to respond to your tenant’s emails and do not call back after receiving dozens of calls from them, it won’t be a surprise if he/she decides not to extend their lease agreement for another year.
Respond to your tenant quickly. If you cannot provide your tenant with a substantial answer, inform them that you need more time to look into matters and that you are committed to resolving the matter. What is important is that you keep your tenants informed.
#2 Create a Preventive Maintenance Plan
Don’t wait for your tenant to complain about a leaky faucet or an inefficient air conditioning unit. Be proactive when it comes to solving issues that are bound to arise. Ask a property management company to help you create a preventive maintenance plan that covers routine tasks such as replacing smoke detector batteries, changing furnace filters, and so on.
Consider creating a seasonal maintenance checklist. For instance, your fall maintenance checklist would include tasks that will prepare the property for the next season, such as cleaning the gutters, winterizing pools, and inspecting railways and stairs.
#3 Respect Their Privacy
Although you own the property, once your tenant signs the lease agreement, they obtain the right to privacy in their new home. Make it a habit to give your tenants an advance warning if you intend on conducting inspections. Provide them with specific times and dates of when you will be accessing the unit. This allows them to plan their day ahead of time.
#4 Be More Than Just Their Landlord
Don’t be the landlord who shows up at the end of each month only to demand rent. Go the extra mile to become the landlord that your tenants can consider as a trusted friend. Simple acts such as sending them a card on their birthday or giving them a gift basket during Thanksgiving and Christmas will help build a solid tenant-landlord relationship.
By establishing trust and goodwill between yourself and your tenants, you are helping your tenants feel more comfortable with communicating their concerns to you.
#5 Set Reasonable Rent Prices
It may be tempting to raise your rental price, but keep in mind that raising the rent won’t always create the “win-win” situation that you’re looking for. Although you may be earning more, a rent increase can deter existing tenants. When your tenant consistently pays their rent on time, it may be better to retain the current rent price. If you raise the rent without notice or a valid reason, you may find yourself losing tenant after tenant.
If you want competitive pricing, consider hiring a property management firm. Professional property managers will evaluate the local real estate market to determine the best rate for your property — one that is reasonable yet can still offer the highest returns.
#6 Offer Rewards and Incentives
Many property managers have come up with creative reward systems for deserving tenants. For example, a tenant can get a discount on their next rent after consistently paying their rent on time for six months. You could even create a point system wherein tenants can earn points for good behavior. They can then redeem prizes such as appliances, electronics, and property upgrades after accumulating a certain number of points.
By offering rewards, you encourage your tenants to follow the terms of their lease, and even to go beyond what is expected of them. As a result, your tenants receive incentives, while you gain peace of mind knowing that your rental is being taken care of. It’s a win-win!
#7 Train Your Staff
If you have multiple rental properties, you may not be able to resolve every concern. In most cases, landlords often hire people who can help them with day-to-day tasks such as answering calls, responding to emails, and addressing complaints. Make sure that you hire competent individuals who understand Fair Housing laws and interact with your tenants with respect. Better yet, hire a property management company that already has a team of trained staff who have years of experience in handling tenant-related matters.
Tenants may come and go, but it is possible to enhance retention rates by making sure that your tenants are happy. Luxury Property Care is trained at maintaining positive tenant relations that will turn tenants into long-term customers. Ultimately, our job is to keep tenants happy by providing premier property management services, which in turn helps you, the landlord, find financial freedom.