Having a property that you are renting out comes with many obligations. Landlords need to manage the needs of the tenants and maintain the property within a reasonable profit margin. Buying an investment property can be a great way to turn a profit. However, if the property is vacant and you are struggling to find tenants, all you’re going to be left with are bills. For this reason, we will give you some tips on how to improve your tenant retention rate and reduce tenant turnover.
Why occupancy and tenant satisfaction matter more than ever
Did you know that hotels strive to have an occupancy rate of 80% or above? It’s obvious that an empty investment property will end up costing you money. Last year’s lockdowns brought on by the pandemic have also taught us a few things you should keep in mind. Most people sought to minimize their costs of living, and that included money they were able to spend for rent. Landlords across the country have had a hard time filling vacancies if their tenants left. It’s more important than ever to improve your tenant retention rate and hold on to the tenants you have.
Allow for communication
You need to be approachable so that tenants will have an easy time coming to you if they need something. Without healthy communication, no other issues will get resolved. This can lead to further complications, and tenants might become frustrated and leave. What’s worse is that you won’t even know why if you don’t talk to them.
Pay attention to what your tenants are saying and respond to any issues they bring up. It’s great if you decide to go above and beyond, but you should be aware of your legal obligations. If tenants feel like you are ignoring them, they are likely to leave.
Keep the rent reasonable
However good your communication may be, at the end of the day, business is business. If the rent is too high, your tenants will leave regardless of how much they like you. Most people expect rent to rise over time, and you can increase it with lease renewals. Remember to be reasonable because if the lease is up, the tenants can choose not to renew it. A good idea is to do some market research and find out what the average rent is for similar properties. When setting the asking price, try to go below market value if at all possible. Furthermore, occasionally, someone might be late with the rent. Allow your regular tenants a certain amount of flexibility. However, it is important that you don’t give in to the demands of problematic tenants.
Offer an incentive to renew the lease
Most tenants will decide if they are staying or not at the time of their lease renewal. Therefore, it makes sense to offer some incentive when it’s time for them to decide. You could give them a discount on the next month’s rent if they choose to renew. Another thing you can offer is to do some upgrades on the property or to get new appliances. Although investments on your part cost money, they will pay for themselves through the rent you’ll receive. You should occasionally be improving the property anyway. Don’t worry if they decline your offer; sometimes, there is nothing you can do to keep them on board.
Maintain the property
It’s up to you to fix anything that gets damaged or broken. The time in which you respond can have a significant impact and improve your tenant retention rate. Know your maintenance responsibilities as a landlord and try to handle even the minor issues within 7 days. If you want to go above what’s required, you can even ask the tenants what they think needs replacing.
Allow tenants to make adjustments to the property
It’s common practice for tenants to return the property to the state in which it was when they started renting. Any adjustments are subject to the landlord’s approval, but it can be a good idea to allow tenants some freedom. People will feel more at home and more likely to stay if they feel invested in the property themselves. Talk to your tenants about what they’d like to change. If the adjustments seem reasonable, you could tell them they don’t need to reverse them when they leave.
What if you are not nearby?
Living near the property that you are renting out can come in handy. You’ll be there to talk to the tenants in person and can easily do routine checkups. On the other hand, it’s not unreasonable to live away from your rental property. You could keep in touch with tenants over the internet and arrange repairs remotely. By hiring professional long-distance movers, you can relocate with ease no matter how far and still keep an eye on the property and collect rental fees. It is even possible to find tenants online without meeting them in person.
Of course, you might need some help organizing everything. If you are attempting to rent a property remotely, we recommend you hire a property management company. That might be a good idea even if you live nearby – someone else can take the late-night calls and schedule the repairs.
Update the appliances
Since landlords don’t live on the property they are renting, they sometimes forget what needs updating and replacing. It’s common for landlords to just replace things when they are broken. This can lead to an assortment of mismatched and outdated appliances. Organize a garage sale to get rid of the old appliances and buy a new matching set. There are other amenities your tenants will appreciate that don’t have to set you back too much. Things like replacing the air filters or deep cleaning the carpets really go a long way.
We hope you’ve enjoyed the article and found a few creative ideas on how to improve your tenant retention rate. With a bit of understanding and a few compromises, it will be easy to keep the tenants happy. Satisfied tenants will stay on for a longer time and might recommend you to others when they eventually leave.