Good tenants are hard to come by, so when the right ones do come along, you’ll want to do everything to get them to renew. That way, you won’t have to deal with vacant periods that can dent your cash flow.
To find out what you can do to encourage them to stay, you must first uncover why they might want to move out. This article breaks down some of the most common reasons why tenants decide not to renew.
#1 Rent is too high
As a landlord, you’re allowed by law to raise your rent yearly. However, if the rent increase is excessive, it may be too expensive for your tenants. For example, a tenant may not want to spend more money on rent when they could use it for other expenses. Or, a tenant may have a medical condition that’s taking a toll on their income. While it’s tempting to raise your rent to make more money, keep in mind that replacing your tenants (particularly good tenants) costs more than keeping your current tenants at the same rate.
If your tenants are responsible people (i.e. they pay their rent on time, abide by the rules, etc.), consider maintaining the same rental rate. Or, if you’ve conducted property improvements and are counting on the rent increase to cover your costs, you can offer to relocate them to a cheaper property (which you own, of course).
With the help of a property management company, you can find a middle ground and encourage your tenants to renew their lease agreements. Your company can also calculate the correct rental rate – one that’s competitive but still budget-friendly.
#2 They need more space
Circumstances such as marriage and childbirth can cause a tenant to move out. Because of their growing family, they’ll want extra rooms, extra bathrooms, and extra storage space. It would be impractical to extend your property, but you may be able to convince your tenants to stay via incentives. For instance, you could improve the property in whatever way they’d like, such as new kitchen countertops, new tiles, or new stainless steel appliances. Hopefully, this compromise will encourage them to stay for a longer time. It won’t be the same as a bigger unit, but it’s better than nothing.
Alternatively, if you have a larger property that’s vacant, you can give your tenants the option to move into it. The same applies to tenants who want to move into a smaller property.
#3 Ignored repair and maintenance needs
You must maintain and repair your property in a timely manner. If you don’t, your tenants will grow tired of you and get angry that you’re ignoring their requests. Keep in mind that your tenants expect you to stay on top of your tasks. For example, if the air conditioner isn’t working, they’ll want you or your property management agent to take a look at it within the day. Some tenants will even be displeased if you don’t provide immediate action for minor issues such as a second-floor window that needs cleaning.
As the landlord, you need to commit your time to property maintenance and repairs. So whether it’s a problem with the wiring, broken window, or flickering light bulb, be sure to stay on top of maintenance, big or small. Use property management software such as a tenant portal to help you log and track maintenance tickets. And even if you can’t cater to their request yet, you should at least reassure them that you’ve received their request.
#4 Noisy Neighbors
Another common reason why tenants move out is because of bad neighbors. Whether they’re loud, rowdy, or rude, bad neighbors can make your tenant’s living conditions the worst. So, are landlords liable for nuisance tenants? Normally, landlords are not responsible but they have to deal with the nuisance tenants. If your tenant’s neighbors are also your tenants, you should step in and remind them of the repercussions of their bad conduct. If they continue to be a nuisance to your tenant, you can consider eviction.
But what can you do if the neighbor isn’t your tenant? The best way to deal with this situation is to ask both parties to settle. If they can’t see eye-to-eye, you may have to intervene or hire a third party (such as a property management firm) to mediate.
#5 Better Options in the Market
If you aren’t the best option out there, you’re in trouble. Why would a tenant want to stay in your property when they can live in a similar (and maybe even better) property for cheaper?
This is especially true when a “renter’s market” occurs or when the rental demand is lower than the supply. A renter’s market can drive rent prices downward and give tenants more leverage when negotiating their rent.
To avoid vacancy, consider investing in property improvements that attract tenants. Compare your property to your competitors to find out what features you can offer. You should aim to outdo the others. A South Florida property management company can help you determine which improvements are worthwhile and will result in a good return on investment (ROI).
#6 Change in circumstances
Wondering why tenants move out? A common reason is that they’re going through unforeseen life changes, such as separating from their partner or having to relocate due to work. In any case, try to accommodate them. Communicate with your tenant and ask them what you can do to help, whether it’s reducing the rent, creating easier rent payment schedules, and so on.
But if that’s impossible, the best you can do is part ways (remember to give them a positive referral so they can find a new place fast!). Even if they will no longer be your tenants, you should still strive to maintain a good relationship with them.
Conclusion
Tenants are the life force of your real estate investment. Without them, you wouldn’t be able to live your dream life as a landlord and earn passive income. To protect your investment, partner with a property management company that’s an expert in tenant retention such as Luxury Property Care. Having gained years’ worth of experience in the real estate industry, we’ve developed tried-and-tested strategies to encourage tenants to stay with you for longer.
Call us at (561) 944 – 2992 to create a tenant retention plan so you never have to worry about vacancies. You can also complete our contact form to request an obligation-free quote for our services.
