According to the National Center for Housing Management, 54% of apartments turn over every year. Each tenant turnover comes with expenses that range from cleaning costs to possible repairs. Lost rent (especially significant when you rely on rental income to pay the mortgage), utilities, and advertising fees can all add up the longer the unit is vacant. Every minute that your unit sits empty it’s costing you money, and the expenses can run up to thousands of dollars.
Tenant turnover will cost you time, effort, and money. Reducing or eliminating your turnover expenses by keeping good tenants longer can help you to be a more profitable landlord. There are many advantages to keeping tenants longer:
- Avoiding or reducing unit turnover expenses
- Having consistent rental income
- Spending less time and effort preparing the unit for rent (cleaning, property showings, advertising, etc.)
- Avoiding the uncertainty of a new tenant
How to Keep Tenants Longer
Considering the monetary and other benefits to keeping a tenant in your unit for as long as possible, it's well worth it to find ways to increase the appeal for your tenant stay put. In many cases, the incentives you offer your tenant potentially will cost much less than the expense to carry a vacant unit. Even better, not all motivating factors will cost you money.
Here are five primary ways to keep tenants longer:
1. Stay on top of maintenance.
Keep your tenant happy by being proactive with property maintenance and routinely performing property inspections.
Few things are more frustrating for a tenant than having unaddressed maintenance requests. Being proactive with maintenance helps keep your tenant happy (no one wants to live with a clogged sink), and shows them that you want to give them a nice place to live. This can be a big deciding factor when your tenant is considering a renewal. Incentives like carpet cleaning or a deep cleaning by a maid service could be very attractive to long-term renters and make them feel appreciated, without breaking the bank.
Additionally, keeping up with maintenance and addressing issues quickly will help you spend less time on repairs when you do have to turn over the unit. Regularly inspecting the unit's condition will help you stay on top of maintenance items that need to be addressed (that the tenant may not have noticed) and can help keep smaller maintenance tasks from turning into larger issues.
2. Be a good landlord
You shouldn’t underestimate the importance of the human factor when it comes to tenants. Your renters will be more likely to want to stay if you’re a good landlord.
Be timely with your responses and make it easy for the tenant to contact you. Maintain open communication to reduce misunderstandings and create a better overall tenant-landlord relationship. Being courteous and respectful goes a long way to make a tenant feel comfortable in the unit.
For example, if you have to make repairs on the unit, consider having workers come while your tenants are at work so that you don’t disturb their peace and quiet. After all, the more a place feels like home, the longer a good tenant is likely to stay. A cooperative attitude also sets the expectation of how you want to be treated in return, which makes it more likely that your tenants will respect you and your property.
If you make certain promises, be sure to keep your end of the bargain. Did you promise a new appliance when they moved in? It’s important to keep your word. Breaking a tenant's trust may have them looking for another place.
3. Know what tenants want most
For many tenants, especially younger Americans, lifestyle quality is a major factor in whether they decide to stay or go. You may own the property, but the tenant should be able to consider it their home. There are ways you can promote this atmosphere, and in doing so, encourage your tenants to stay longer.
Offering features that tenants care about most will help you attract better long-term tenants and serve as an incentive for them to renew their lease. Strategic upgrades like stainless steel appliances, hardwood flooring, and central air conditioning are features that can make a house feel like home. These upgrades can potentially be good investments if you want to encourage tenants to stay longer.
You may also want to consider renovations in the kitchen and bathroom, which are especially appealing to tenants. Even simple upgrades like a new kitchen backsplash or updated cabinet hardware can make a big impact. While there is an upfront cost to new appliances and renovations, it may be worthwhile when you consider the high expense of tenant turnover.
4. Be proactive with renewals
Reach out to your tenant 90 days before the lease is up to ask them if they want to renew. Even if you don't get a response right away, it might get them thinking about their plans early so they can give you more notice. That way, you can get a jump on advertising before the tenant moves out and perhaps have someone lined up to take their place without losing even a month of rent.
Offer a rent increase that is less than your usual jump (or even no increase) for the upcoming year if they renew for another year. If they seem hesitant about renewing, then ask them what it would take to get them to stay. This is another reason to have a good landlord-tenant relationship. The better your communication with a tenant, the more likely they are to open up and tell you what incentives are most meaningful to them.
They may request some home maintenance upgrades or a break on rent. See if you can negotiate a deal that makes sense for both of you. You may find that fulfilling a tenant's request may turn out to be less of an expense for you than turning over the unit and a taking a risk on a new tenant.
5. Encourage a longer lease
Consider asking the tenant to sign a longer term lease at a reduced rate. If they renew every six months, extend the lease to a year. If they renew yearly, consider extending the lease to two years at a reduced rate. While this method could mean you lose out on the profit from rent increases, it could be worth it to keep a reliable, rent-paying tenant longer. Make sure you properly crunch your numbers so you know what option is best for you.
Retaining reliable, rent-paying tenants is good for your rental business. By encouraging good tenants to renew their leases, you'll avoid the costs associated with vacancy and have the peace of mind that comes with keeping tenants who you already know will pay their rent on time and will respect your property.
With SmartMove’s quick and reliable tenant screening service, you'll be able to make faster and more informed decisions. A consistent process that involves an extensive landlord credit check and reference checks will greatly increase your chances of finding excellent tenants and making your investment property profitable.