What's the secret to retaining tenants? In an era of high tenant turnover that's caused by everything from general dissatisfaction to rate increases, it's more important than ever for property owners to learn what it takes to keep tenants happy. What makes tenant retention important is that keeping a unit occupied consistently increases rental profits. These seven tips to improve tenant retention can boost lease renewals to help you enjoy the passive part of passive income instead of constantly dealing with lease applications and tenant screening.
1. Be Fair and Consistent With Rental Rates
Pricing monthly rental rates fairly is the best way to inspire tenant loyalty. Conduct market research that involves looking at comparable rentals to establish a fair market value for units. Aggressive rental rates that leap forward each year are likely to send tenants running if cheaper options exist in the local area. While most tenants understand that periodic incremental increases are standard, increases that come across as opportunistic or punitive can generate negative word of mouth that sends both current and potential renters running! Pricing rental rates just under the standard market rate is one of the best ways to keep tenants locked into their leases.
2. Offer Lease Renewal Incentives
How do you make your property seem like the best deal on the block lease term after lease term? Give current tenants an "insider deal" by providing lease renewal incentives. The easiest way to do this is to offer current tenants a preferred rate that is lower than the current rate for new tenants. Typically, this is done by offering a percentage off when tenants renew by a certain date.
If offering discounted rent isn't an option, landlords can consider other perks that could also improve tenant retention. Some landlords partner with local gyms to offer discounts on memberships. Some other lease renewal incentive ideas include discounted parking, scheduled upgrades for the unit, appliance upgrades, a one-time cash offer, or gift cards.
3. Be Communicative and Responsive
Effective landlords don't just provide places to live. They provide customer service that ensures tenant satisfaction for the duration of a lease agreement. Tenants across the country are frustrated by "missing" landlords. They are waiting days to hear back after submitting questions or requests. Many are left feeling like they need to chase down their landlords just to get answers to simple questions.
A commitment to great service should start with a carefully curated welcome packet for new tenants that provides clear instructions for submitting service requests, booking appointments with the landlord, or reaching out with questions. Landlords should also commit to specific turnaround times for responding to tenants. In fact, creating a system where you're able to respond within the same business day is one of the strongest ways to impress tenants with your commitment to customer service. While not all problems can be fixed the same day, hearing back from a landlord can remove some of the tension and anxiety tenants feel when they need assistance because they will have assurance that the matter is being handled.
4. Establish Strong Relationships With Local Vendors and Contractors
A good tenant retention strategy involves many more people outside of the landlord and tenant. As part of a commitment to providing tenants with top-notch customer service, a landlord needs to seek out highly rated, dependable local experts to be on call when work or repairs need to be done around the property. This collection of experts should include plumbers, electricians, contractors, painters, subfloor specialists, and other home-improvement experts.
Many professionals are eager to form partnerships with local landlords or building owners because they appreciate the ongoing, consistent work opportunities these relationships present. Many will give priority to their rental clients over ordinary residential clients. These relationships ensure that landlords can get work done on a priority basis instead of waiting in line to book appointments. Tenants can enjoy speedy results that help to preserve a high quality of life in their rental units.
5. Start With Good Tenants
A great tenant doesn't just make a landlord's life easier. A good tenant can also boost a property's retention rate. In addition to staying longer, quality tenants are more likely to be on time with rent payments, treat the property respectfully, and comply with rent increases.
While landlords may be eager to simply get units filled without hassles, taking shortcuts during tenant selection can really come back to bite you. Tenant screening is the first step in selecting the right tenant. A general screening should consist of a background check, income verification, and reference check. Don't make the mistake of skipping references just to save time! Previous landlords can provide some very important insights into tenant behaviors. Here are some questions to ask:
- How much was the monthly rate paid by the tenant?
- Does the tenant have a history of making payments on time?
- Did any issues arise during the tenant's lease period?
- Did the tenant maintain the property appropriately during their lease?
- Would you sign a lease with this tenant again?
Of course, landlords must follow all tenant screening laws when seeking out a quality tenant. Under the Fair Housing Act, landlords are prohibited from showing preference to applicants based on race, religion, national origin/ethnic background, gender, familial status, or mental/physical disability. If you have any questions about how to build a screening process for your property, consulting with a local law firm can be a helpful way to make sure that you're complying with all state and federal rules for rental applications.
6. Create a Tenant Survey
It's easy to assume that tenants are happy if they haven't made any complaints. However, most landlords don't learn that tenants are unsatisfied until those tenants tear up their lease renewals in favor of greener grasses at nearby properties. Create surveys for gauging tenant contentment that can be sent out at the three-month and nine-month marks of a lease period. While the results of the first survey will help you to create a better experience early on in the lease, the nine-month survey will help you to improve conditions before the critical lease-renewal period is upon you! Don't underestimate the benefit of making tenants feel like you care about their experience in your property.
7. Offer Longer Leases
Offering a two-year lease is a great way to improve tenant retention. Some landlords are reluctant to do this because it locks the monthly rental rate in place for two years instead of one. However, the benefit that comes from having a consistent tenant for two years can be much greater. After all, it only takes one month of a unit being empty for a landlord to lose out on any extra profits that can be gained from raising rental rates the next year.
8. Be Prompt With Maintenance and Repairs
Nobody wants to live in a place that looks like it's falling apart. Property owners have a legal obligation to provide a safe, well-maintained place to live for tenants. Creating a place that tenants can be proud to call home makes them more likely to stay in that home for more than one lease period. Additionally, taking care of a home while it's being occupied helps a landlord to preserve the long-term value of their asset.
One big way that property owners lose money is by waiting until issues with a property become severe before addressing them. You're already too late on an issue if a tenant is calling you to let you know that there's a dangerous problem lurking in a home. For example, keeping up with deck maintenance will create a beautiful place where tenants can relax while also preserving the lifespan of a deck for the property owner. That's your cue to make an appointment for deck waterproofing today!