Business 101 says that it is five times cheaper to retain a customer than it is to acquire a new one. This same concept should be applied to property owners/managers and their tenants. We know It takes great effort to find a reliable and responsible tenant, just as much effort if not more, to keep them around. An effective property management company will have tenant retention prioritized and strategies in place. Establishing a good retention formula can save you from the expenses and headaches of tenant turnover, and foster a healthy relationship between you and your renters.
Why is Tenant Retention Important?
- Costly marketing strategies
- Time spent creating listings, screening, and showing properties
- Vacancy hurts your revenue
So what can you do to keep your tenants around longer?
Keep Your Property in Great Condition
Keeping up with your property and addressing maintenance concerns promptly is a great way to increase tenant satisfaction. Providing services like lawn care, pest control, and routine inspections lets the tenant know that you care about their living environment and the property. From a tenant’s perspective, nothing is more frustrating than feeling ignored after submitting a question or a maintenance request and this can often lead to tenant turnover. In addition to keeping your tenants satisfied, keeping up with your property will also help you maintain the condition of the home and increase its longevity. At Utopia, we have in-house staff dedicated to maintenance and repairs with fast response times.
Maintain Exceptional Communication with Tenants
One of the most important facets of a strong landlord/tenant relationship is professional and honest communication. Part of the responsibility of being a landlord is being on call at any given time of the day, whether it be a maintenance request, a property question, or an emergency. Tenants will feel valued when you take the time to respond in a timely and professional manner ensuring them that you are taking the appropriate actions to address their concerns. When you employ a property manager, it doesn’t hurt to follow up with your tenants to ensure that their needs are met and handled promptly. The landlord/tenant relationship is a two-way street, and mutual respect will increase the longevity of the relationship.
Offer Lease Renewal Incentives
At the end of every lease, the tenant will have to make a decision to either stay and resign or move. There are small gestures that you can make to sweeten the deal of them sticking around such as offering a small cash bonus, or gift cards to local shops and restaurants within the community. Larger incentives may be appliance upgrades or minor renovations that you were planning on making to the house anyway. Depending on the costs associated with these upgrades, it could be less expensive than finding a new tenant and possibly facing a vacancy.
Keep Rental Rates Consistent and Fair
Of course, a major concern of landlords is maximizing rental income, but being too aggressive with rent increases can cause tenants to leave and look for more affordable housing elsewhere. For those valued tenants, try to keep the rent in line if not slightly below the market, and consider minor increases every 2-3 leasing renewals if possible. Keeping the rent slightly lower than the market average and making increases less frequently puts you at an advantage with cost-sensitive tenants.
Screen All Tenants
Choosing the right tenant for your property can be a long-term solution. Screening is essential in the tenant retention formula as it gives you a better idea of the intention of the tenants and their rental history. Do they have a history of resigning leases and paying their rent on time? Do they have a stable and consistent job that allows them to stay in one place for longer than a year? These are important questions that can be answered in the screening process and will stand as a good indication of whether or not they are likely to stick around.