Hey there, landlords and property owners! Let's talk about one of the most crucial aspects of running a rental business: tenant retention. We all know that tenant turnover can be a real headache and a drain on your resources. That's why finding ways to increase tenant retention should be at the top of your priority list. Today, we are going to share with you some practical tips to help you keep your tenants happy and your rental business thriving. So, buckle up and get ready for ten effective strategies to boost your tenant retention rates!
Why Tenant Retention Matters
Before we dive into the strategies, let's first understand why tenant retention is so important. By maximizing your efforts to keep tenants happy and satisfied, you're not only saving money but also ensuring a healthy bottom line. Just take a look at these costs that you can avoid by retaining your current tenants:
Marketing: Posting listings can quickly add up, costing you anywhere from $50 to several hundred dollars.
Leasing Fees: If you rely on leasing staff or realtors to fill your units, you may end up paying leasing fees ranging from several hundred dollars to the first month's rent.
Vacancy Time: The turnover and marketing process can leave your unit vacant for 30 to 45 days or even longer. That means you're missing out on one to several months of rent.
Turnover Costs: On average, turnover costs in the industry amount to around $2500. Depending on various property-specific factors, this number can go even higher.
Time: As a landlord, your time is valuable. By avoiding tasks like creating rental listings, conducting property showings, tenant screening, managing repairs, and conducting inspections, you free up your time for other important business or personal tasks.
Now that you understand the significance of tenant retention let's jump into the strategies that will help you achieve it!
1. Pre-qualify and Screen All Tenants
The first step to ensuring high tenant retention rates is to start with qualified and quality tenants. Tenant screening is absolutely crucial and has a direct impact on your turnover rate. Don't forget to verify their income, check their credit history, and perform criminal background checks. Most importantly, make sure to request and follow up with references from their previous landlords. By asking open-ended questions like:
Were rent payments made on time and in full?
What was the monthly rental rate?
How did the tenant maintain the property?
How was the tenant's communication with you?
Would you rent to this tenant again?
These questions will give you valuable insights into the tenant's behavior and reliability.
2. Make Maintenance a Priority
Keeping up with maintenance and repair requests is vital for any rental business. Being proactive in scheduling annual and routine service for your property's major systems will go a long way in preventing emergency repairs. Regular maintenance not only keeps your investment in great shape but also helps increase tenant retention. When an issue does arise, address the tenant's concern promptly and keep them informed throughout the repair process. By showing that you care about their experience and promptly resolving any issues, you build trust and satisfaction among your tenants.
3. Offer Lease Renewal Incentives
When it's time for your tenant to decide whether to renew their lease or move out, it's a critical juncture for you as a landlord. To encourage them to stay, consider offering lease renewal incentives. Partnering with local gyms or cafes to offer special promotions or deals to your tenants can be a great idea. Another option is providing a monetary incentive, such as a discount on the renewal month's rent. These incentives show your tenants that you value their continued presence and are willing to go the extra mile to keep them happy.
4. Keep Rental Rate Increases Consistent and Fair
While profits are essential, being overly aggressive with rental rates and increases may drive tenants away instead of retaining them. It's important to strike a balance. Rather than increasing the rate at every renewal, take the time to research local comparable rentals and ensure that your rates are competitive. Consider keeping the rate just below market rates and only requesting smaller increases. By offering a fair deal, you make it harder for cost-conscious tenants to find a better alternative and increase the likelihood of lease renewals.
5. Be Professional but Understanding
As a landlord, it's important to enforce the terms of the lease. However, exceptional circumstances can arise which may affect both tenants and landlords. It's crucial to approach such situations with a level of professional understanding. If a good tenant starts paying late or misses a payment, reach out and check-in. If they're facing financial difficulties or hardships, try to work together to find a solution or alternative payment plan. Showing empathy and flexibility in emergencies can help maintain a strong landlord-tenant relationship and prevent the hassle of finding a new tenant.
6. Track the Local Market
As a landlord, you need to stay updated with local rental rates and market trends. This knowledge allows you to position your property competitively. Keep an eye on amenities and upgrades offered in the local market and their associated prices. If your property is outdated or overpriced compared to similar rentals in the neighborhood, your tenants may be tempted to explore other options. Put yourself in their shoes and make sure your property provides good value for the rental price.
7. Provide Top-Notch Customer Service
Delivering excellent customer service is a straightforward yet powerful way to boost tenant retention rates. Responsive and honest communication is key. Besides efficiently processing maintenance requests and promptly responding to inquiries, ensure that tenants have all the necessary information at their fingertips. A comprehensive tenant welcome packet, provided at move-in, can outline procedures, contact details, and property-specific tips. When issues arise, respond as quickly as possible, ideally within the same business day. Keep your tenants informed about the progress of repairs, so they feel assured that their concerns are being taken care of. Building a reliable network of trusted vendors will help you address repair needs faster. Remember, top-notch customer service and proper maintenance are essential for increasing tenant retention.
8. Take Time to Call
While written communication is often preferred in the rental industry and may even be required by law for certain matters, there are times when a personal touch goes a long way. When sending out important notices or emergency reminders, consider picking up the phone as well. Calling your tenants provides an opportunity to answer any questions they may have or ensure they receive vital information about their lease or rental unit. While this step is not necessary for every communication, tenants appreciate the personal connection that a conversation provides.
9. Send an Exit Survey
Even though your goal is to retain tenants, the reality is that they will eventually move out. When that happens, take the opportunity to send them a short but focused exit survey. This survey can provide valuable insights to help you improve your rental business. Consider asking questions like:
Why did you decide to vacate?
What could the property manager have done differently?
Were you satisfied with the property? Why or why not?
Is there anything that could have convinced you to stay?