A strategic tenant retention plan is good for your ROI. When you’re able to keep great residents in place, you’ll avoid vacancy costs. You’ll also spend less on maintenance, utilities, cleaning, and marketing – all things that are your responsibility when you’re turning a property over between tenants.
Here’s how to keep your tenants renewing their lease agreements year after year.
It Starts with Screening
You’re going to screen tenants to ensure they’re financially stable and prepared to meet their rental payment obligations. You’re looking for responsible renters without a history of eviction or property damage at former homes.
You should also screen for longevity.
Avoid tenants who move every single year. If there’s a rental history that shows leases were broken or tenants moved out prior to the end of their lease terms, you’re not going to be able to count on great retention with them. Make this part of your standard rental criteria. Ideally, you’ll find stable tenants who are looking to stay in place for at least three years, maybe even longer. If you see they were in their last home for five years and the one before it for three years, there’s a good chance you’ll enjoy low turnover when you approve them.
Provide a Positive Rental Experience
Good landlords have an easier time retaining tenants than landlords who are non-responsive or difficult. Make sure you’re communicating with your tenants and helpful.
Well-maintained properties will retain good tenants, so it’s important to respond to routine repair requests quickly. If you’re slow to respond, your tenants are likely to leave at the end of the lease term. Make maintenance a priority, and respond to repair needs with a sense of urgency and respect for your tenant’s requests.
Making routine and regular improvements will also help you keep tenants. Good renters want to live in a home that’s attractive and comfortable. Replace out-of-date appliances, make sure the walls have fresh paint, and install floors that are easy to maintain and clean.
Both repairs and regular improvements will reduce tenant turnover and even increase the amount you are able to charge in rent. When your residents get a sense that you’re willing to improve the property and make it better for them, they’ll want to stay.
Do Nice Things for Your Best Tenants
Make notes about your tenants and their family members and interests. If you know your tenants have school-aged children, provide a list of summer camp resources when the school year is coming to an end. Send holiday cards and remember birthdays. These things provide a personalized rental experience that tenants will appreciate.
A gift at move-in or during the renewal process is also a nice touch and can contribute to good tenant retention. Perhaps a gift basket or a gift card to a local restaurant will help welcome your tenants and demonstrate that you appreciate them.
Leverage Rental Increases at Renewal Time
Rental increases are normal and expected. But, you don’t want to chase away a great tenant with an unreasonable rental increase that’s higher than what the rental market demands. Take a look at what similar properties are renting for, just like you did when you established the rental value initially.
Remember to consider the current economic climate as well and be attentive to the needs and the limits of your tenants. Consider offering incentives for tenants who are willing to stay in place. For example, maybe you’ll increase the rent 2 percent when tenants renew their lease for another year, but you’ll increase it 5 percent if they elect to transition to a month-to-month lease. Always be mindful of local and state rent control laws when you’re establishing a renewal rental value.
These are four of the best tips we can provide on retaining tenants. If you’d like to hear more, please contact us at Action Properties.