When your tenants move out, it can cost thousands of dollars in lost revenue, repairs, renovations, and marketing to get your property re-rented.
A hallmark 1987 study by Walker Research identified the cost of finding a new customer versus keeping an existing customer was five times the effort and cost.
Your tenants are customers!
A move out by a tenant often includes repairs, an overall refreshing of the property, lost income and carrying costs over the rental marketing period. Keeping good tenants is imperative if you want to maximize your profits. So, how do you retain them?
Remember, when a tenant rents from you, it is their home and you want to give them reasons to stay. These seven strategies can help you avoid giving your tenants a reason to look for another place to live. Give them every reason to stay right where they are. Your tenant will want to continue to rent from you because you provide properties and service that are a notch above what they can find elsewhere.
1| Communicate and Be Available
If the tenant calls, emails, or texts you, respond. Answer your phone, even at 2 a.m. It may be inconvenient, says Pam Kosanke, marketing director for Renters Warehouse, but they could be dealing with a flooded toilet or broken water heater.
“Being a landlord means being available to your tenants when they need you most,” Kosanke points out. “Ignoring your tenants’ calls is the quickest way to lose your tenants’ trust.” When you do miss a tenant call, return it as soon as possible. Even at times when you are busy, let the tenant know that you will respond to their needs as soon as you can. Then do so in a reasonable time span.
Don’t wait for the tenant to call you again, though. Go the extra mile and reach out to your tenants, asking how the unit or property is. A tenant may not want to bother you with small problems, like doors that stick. However, too many small problems could prompt them to look elsewhere. Give them a chance to voice those concerns to you, so you can address them quickly.
Remember: If you are a landlord, do-it-yourself, local, regional or nationally branded professional property manager, you are always competing with someone hungrier than you are who wants the cash flow your tenants represent.
2| Respond to Requests
Once you’ve listened to your tenant, act. Some issues need to be resolved as soon as possible, like the air-conditioner that goes out in the middle of the summer or the heater in the winter. Others, like the door that sticks, can wait for a few days. Kosanke recommends applying the Golden Rule and treating tenants the way you would want to be treated. If you yourself would want something fixed now, take care of it immediately for your tenants.
But, you still want to take care of those repairs, that can wait a few days, promptly. If you promised to fix the sliding glass door, don’t put it off for three months, or even three weeks. Call your handyman today and schedule an appointment to get it fixed.
“Don’t make promises to your tenants you can’t keep,” Kosanke says. “If you tell them you’re going to do something, make sure that you do it in a timely manner. If there are roadblocks, keep them in the know.”
3| Maintain the Property
If, as part of the lease agreement, you provide maintenance — pool service, landscaping, or upkeep of common areas — make sure it is done regularly and well. Hire professional companies in good standing with the Better Business Bureau.
Stay on top of fixing the little things if you want to keep your tenants. Maintenance extends beyond the lawn and pool, though. Repaint the exterior when the paint begins to peel. Replace the aging roof before it leaks. Not only will you receive fewer calls asking for repairs; theoretically, the tenant will probably take better care of the property and you stay ahead of deferred maintenance that left unchecked will inevitably cost you in tenant retention, “days on market” for the next tenant, tenant quality, and maintenance catch up costs.
Sam Maropis of Training Landlords advises landlords to stay on top of what they might consider the little things because the little things matter to tenants and they may even cut you a little slack when something big happens, like the air conditioner going out.
“I’m very big on providing the best possible maintenance all the time,” Maropis says. “This may be your rental, but this is their home.”
Fred Lewis of The Dominion Group says part of his property management regimen is to inspect regularly, particularly around 90 days prior to a lease anniversary or expiration. If they identify “irritations” that do not even come close to habitability issues, they will repair these as part of their campaign to keep a tenant happy and keep a tenant in place.
4| Update Your Property
You don’t have to upgrade that outdated dishwasher — after all, it still runs — but the money spent on a new one could save you lost revenue if the tenant decides to move. Consider upgrading the kitchen appliances, light fixtures, bathroom fixtures, and even the flooring when they are outdated or worn. Just don’t make purchases that are out of line with what is normal for the neighborhood.
Upgrades make a difference, but they don’t trump the basics, according to David Smith, vice president of real estate research company Kingsley Associates. Tenants value a safe place to live with properly functioning air conditioners and appliances. Although they consider the newness and looks of appliances and finishes when it’s time to renew the lease, tenants ultimately will choose to stay put if they feel safe, can rely on the property’s systems (heat, air, appliances, etc.) to run properly, and receive good customer service.
If your tenant pays electric and gas utilities, pay attention to energy efficiency during any pre-rental renovation or post-rental updates as utility bill surprises can put a rental out of reach for a tenant with a tight budget.
In some cases, the tenant may come to you with concerns that you can address with an upgrade. For example, if a good tenant mentions increased local crime, you can offer to install an alarm system. Depending on the system, the investment would be minimal.
5| Tenant Feedback – Send Out a Survey
Another way to solicit tenant input is through a survey. This strategy works particularly well with apartment complexes and multi-unit properties. Companies, like Kingsley Associates, can conduct the survey and prepare the results for you, or you can make your own survey using an online source like Surveymonkey.com. Keep the survey anonymous, if you can, and share the results with your tenants. Let them know of any improvements or changes you will make as a result of their input.
“Surveying residents is an effective way to understand how satisfied they are, what is driving that satisfaction or dissatisfaction and what their likely loyalty is,” says Smith. He adds that using a third-party service allows you to compare the results received from your tenants against an objective industry benchmark, so you get a better picture of how you are doing compared to other landlords.
To obtain similar information, you could also conduct an exit interview. Even if the tenant is leaving due to factors beyond your control, such as relocating for a job, you might learn about changes and improvements you could make that might help retain other good tenants. In an exit interview, at the very least, document the official reason for the move and where they are moving (including rent amount and size).
6| Keep Rents Competitive
To increase their bottom line, some landlords raise the monthly rent rate whenever the tenant renews the lease. It may be what they consider an insignificant amount (say, $25 a month), but it could be what tips the scale, as far as the tenant is concerned, in favor of renting somewhere else from someone else.
Before you raise the rent, review what comparable properties in the area are going for. Online rental listings, like those found on Craigslist.com or Rentals.com, can give you an idea, but for a more accurate figure, use a service like RentRange.com, which provides the local average price per square foot by property type and even comps, depending on the service you subscribe to. If your rental property is overpriced, and you want to keep your good tenant, consider reducing the rent. Or at the very least, think about leaving it where it is.
Pay attention to utility costs and anything that can be done to reduce them.
Price is obviously one of the primary factors a tenant uses to determine if they want to initially rent from you. And whether they want to renew their lease, says Smith. But, it’s not the only consideration. “Residents are often willing to pay a premium for the convenience of having high-quality customer service,” he says.
7| Reward Good Tenants
Often, there’s more stick than carrot in the landlord-tenant relationship. When a tenant doesn’t pay on time, they’re charged a late fee. If they don’t pay at all, they’re evicted. If they damage the property, they forfeit some, or all, of the security deposit. Rarely though is a good tenant recognized for being a good tenant.
It doesn’t have to be much. Kevin Conlon, co-founder of Meridian Pacific Properties, says he gives his good tenants a gift card for a turkey at Thanksgiving along with a note thanking them for maintaining the property and paying on time. A small gesture like that goes a long way to making the tenant feel appreciated.
Read more at ThinkRealty.com