One of the most fundamental parts of a successful rental property is tenant placement. Your tenant screening process should be structured such that it will acquire the best possible quality tenants. Finding the right tenant is no simple task and is something that should not be taken lightly, as it will make or break your investment. But what do you do once you’ve found that amazing tenant? How do you make sure to keep them? Tenant retention is another topic that is key to understanding how to optimize your rental portfolio.
High tenant retention is something that says a lot about your property manager. It shows that tenants are satisfied with the landlord and the property management team. Good tenant retention rates also mean less vacancy. The lower your vacancy, the higher your cash flow, as vacancies tend to be the biggest expense any investor could experience.
A good tenant retention rate also indirectly promotes your rental property. When tenants tell someone they have been living in the same property for years, they indirectly vouch for the standard of living it offers with its high level of upkeep and maintenance.
In our discussion, we will outline five ways through which landlords can improve their properties’ retention rates.
Provide Renewal Incentives
Providing an incentive for renewing a lease is always a great way to retain good tenants. Giving them a discount on the first month or sending them a gift card upon signing will go a long way. Tenants are used to being mistreated and overlooked. We find that providing them with small gifts during the holidays in the form of gift cards always brings out the joy in them. Tenants don’t expect to receive any gifts from their landlords. The surprise alone is enough to take their breath away.
Treat Tenants with Compassion
As was mentioned above, tenants are used to being mistreated and overlooked. The term “slum lord” gets thrown around far too often. It doesn’t need to be this way. Treating tenants with compassion is paramount to retaining the good ones. Of course there are always a few bad eggs that try and game the system and make your life difficult, but the truth of the matter is that the majority of renters are just normal people trying to live a full life. Listen to their concerns and actually try and solve their problems. Be part of the solution and not the problem. Property management is all about problem solving and those with no compassion tend to have a hard time solving simple issues.
Hire a Specialized Property Management Team
Far too often, rental owners feel they can save on fees by managing their own properties. The truth is that in order to really optimize and maximize profits on your rentals, you need certain systems in place to facilitate and streamline all work orders, collections, and any other property management related task. Many investors fall short of this and are unable to provide the level of service necessary to really nurture and retain great tenants. This highlights the importance of hiring a good property manager to ensure that you rental is performing and that tenants are happy. The right property manager will take pride in serving you and your tenants and will always put your needs first before their own.
Devise a Tenant Feedback System
Always asking for feedback from your tenants and keeping them included in parts of renovations and issues with maintenance is something that they will definitely appreciate. Too often tenants feel neglected by their property manager. Satisfying their needs quickly will always go a long way. After each interaction with our tenants, we always send a brief survey for them to fill out and give us a rating. We find that tenants really value this and do provide great feedback.
Keep Rental Rates Competitive
Keeping your rental rates competitive is another way to keep great tenants. Being slightly cheaper than the competition while also providing a great place to live is something that will always help you keep your great tenants. Raising rents on good tenants is always a slippery slope. We also understand that expenses always go up and that raising rents is something that is pretty much unavoidable. There is a balance, however between tenant retention and rent hikes. In many cases, it is far more beneficial to only slightly raise rents than to hike them up to full market value, as the cost of losing a good tenant will far outweigh the increase in rent in many cases.
When a rental property succeeds in improving its tenant retention rate, it transforms into a well-oiled investment machine that churns profits for its owner over time. By taking the five measures discussed above, you can make your rental property a source of reliable and steady income for generations.