Learning how to retain your tenants, and encouraging them to sign lease renewals, is something all successful property owners do. In fact, learning this skill early on saves you time and money in the long run. When tenants renew, you eliminate the need to advertise a vacancy, screen for new tenants, draft a new lease agreement, and prepare your property for new tenants. Whether you self-manage or employ a property management representative, the tips below will help with your investment properties’ resident retention.
Why Encouraging Tenants to Renew a Lease is a Good Idea
Great tenants are not always easy to obtain, so do not let them getaway! Besides the obvious benefit of having a steady rental income, there are other benefits to sticking with the tenants you have. Check out some of these reasons below before you decide to look for someone new in your rental property.
- Filling a Vacancy is Expensive – Finding a new tenant is time-consuming and costly for landlords. Marketing, turnover repairs, and extended vacancy expenses all eat into your profits, and there is no surefire guarantee the new tenant will be a good fit. Besides cost, there is a tremendous amount of time and effort involved in showings, screening applicants, preparing documents, and reviewing procedures with new occupants.
- Avoid Costly Turnover – When you retain a tenant, the need for property turnover and move out inspections is eliminated. Overall, this can save landlords hundreds if not thousands of dollars. Typical turnover includes a thorough cleaning, painting, miscellaneous repairs, and compliance fees, such as a lead test.
- Renewals Still Allow for Increased Rent – With proper notice according to the rental agreement and state laws, landlords can offer their tenants renewal options at an increased rate. Most often, rent increases hover between 2% and 5% on the high end per year. Before choosing an increased amount, research the local market value and be sure not to try and gouge a great tenant. Doing so might make them leave.
- Existing Tenants Know the Property and Rules – There is a benefit to someone familiar with your property. They are more apt to quickly recognize potential issues, and keeping them avoids you having to “break-in” new residents. Existing occupants presumably already know the lease, its provisions, and special rules; therefore, saving time and aggravation in any potential misunderstandings.
The 5 Essential Ways to Boost Resident Retention Rates
Every landlord wants and relies on a steady stream of rental income. To best accomplish this, it is essential to maintain good professional contact with your tenants and understand their needs. By finding the balance between ensuring they are happy with protecting your profits, you will reap the benefits of tenant retention. Below we explore 5 ways to boost resident retention rates for your rental business.
- Cultivate a Strong Landlord-Tenant Relationship
- “Thank You” Goes a Long Way
- Make Tenant Satisfaction a Year-Round Priority
- Solicit Tenant Feedback and Make Improvements
- Offer 24/7 Rental Property Maintenance
Cultivate a Strong Landlord-Tenant Relationship
Property management companies always stress the importance of first impressions when it comes to the landlord-tenant relationship. And there is a reason for that: how you begin a lease term sets the tone for the rest of the tenancy. That said, it is easy to forget to continue building on those relationships as your tenants settle in. However, when it comes to higher resident retention rates, it is this relationship with your tenants that matters most.
Do not spend all of your time and resources marketing vacant properties, dealing with problem tenants, and seeking new investment properties. Instead, take the time to solidify relationships with good tenants that you hope to keep on for another lease term.
“Thank You” Goes a Long Way
Expressing your gratitude towards tenants when sending out lease renewals goes a long way to encourage high-quality tenants to stay. Try giving your best tenants something meaningful when it comes to rewarding them for their great tenant behavior. Of course, a discount on rent is always welcome, since 58% of tenants prefer lower rent rates when it comes to incentives. However, here are some unique ideas you can try should your budget allow:
Top Incentives for Tenant Lease Renewals
- Reserved Parking Spaces – Loyal tenants are sure to appreciate a reserved parking spot. Perhaps a covered spot or one that is closer to the property is something you can offer as an incentive. This works especially well for properties in urban areas where parking space is limited.
- Deep Clean – Many property owners offer an annual carpet cleaning for tenants that sign lease renewals. However, taking it one step further and offering a house-wide deep clean is sure to make your tenants that much more satisfied.
- Buy a Gift – Depending on your budget, and how much you value your tenant, consider buying them a unique gift that you would not normally purchase for an adequate tenant. For example, annual passes to the local zoo or amusement park, new furniture, or even something electronic such as a TV can go a long way when it comes to tenant satisfaction.
As you can see, there are different ways to reward residents for being a great tenant and signing lease renewals. Sometimes, all it takes is a small incentive to push them in the right direction and convince them to stay.
Make Tenant Satisfaction a Year-Round Priority
Just as it is important to work on your tenant-landlord relationship throughout the lease term, it is important you check on the level of your tenant’s satisfaction as well. If you wait to find out your tenant does not want to renew come lease renewal time because they were not happy, you have missed an opportunity.
Therefore, check on your tenants year-round to ensure any minor issues they are having are addressed immediately. This proactive approach shows tenants that their concerns matter, and in turn, you are also protecting your property’s overall condition and value. Proactive and attentive landlords are a plus for renters and may entice them to stay.
Solicit Tenant Feedback and Make Improvements
One thing all our property managers encourage their clients to do is collect feedback from current tenants. This helps owners determine what improvements, if any, can be made. Again, waiting until lease renewal time to find out your tenants are unhappy is too late. By the time a renewal rolls around, if they are unhappy, chances are they have already made their mind up to leave. To help avoid such a situation, check out these helpful feedback tips below.
How to Collect Feedback from Rental Tenants
- Meeting – Attempt to meet with your tenants face-to-face for a more personalized meeting
- Send a Survey – For tenants that cannot meet in person, make an online or mail-in survey available so they can participate at their own convenience
- Incentives – Consider offering a small incentive to get tenants to complete the survey, such as a one-month rent discount
- Carefully Consider Options – Take the time to work with your property management company once results come in to make needed improvements
In addition to maintaining an open line of communication with your tenants throughout their lease term, implementing an annual satisfaction survey can help you lower tenant turnover rates, and make your rental property business more successful.
Offer 24/7 Rental Property Maintenance
Around the clock, maintenance is something all tenants appreciate when it comes to leasing a rental property.
When you fail to uphold the overall maintenance procedures you have in place, and problems ensue, tenants become frustrated, and your property condition suffers. Make sure your tenant knows from the start what to do in the case of an emergency versus reporting a minor repair issue. Give them all the appropriate contact information – property manager, contractors, emergency maintenance, and the after-hours call center – so that when they need something, they know exactly what to do and who to call.
In addition, it is crucial you stay on top of the relationship your property management company and vendors have.
If that relationship is broken, this will surely carry over into any work performed on your investment property. Poor maintenance procedures or work can bother tenants to the point they do not want to sign a lease renewal with you.
When is it a Bad Idea to Renew Tenants?
No one likes to dwell on it, but there is a fair share of bad ones for every great tenant. In some cases, it is in your best interest to move on from an existing occupant and not offer a renewal. The key to this decision is to evaluate the circumstances against your chances of filling a vacancy. Below we list a few common reasons when parting ways might be for the better.
- Tenants Rarely Pay Rent
- They Trash Your Property
- Fail to Report Maintenance Issues
- Does Not Follow the Lease Terms
- Refuse to Maintain Standards of Cleanliness
Tenants Rarely Pay Rent
One-off occurrences happen sometimes but, habitual late or non-payment is cause for concern. If you allow this to continue, landlords may end up in eviction proceedings anyway, which is another costly process. Sometimes it is more beneficial to cut your losses and non-renew.
They Trash Your Property
Your rental property is an investment, and to keep it a profitable one, it needs to be in good condition. A tenant who does not hold up their obligation to care for the unit is detrimental to your investment. The longer they are there, the more damage is created. If they fail to maintain the outside of the home, you could be hit with code and city violations as well, so it is time to move on and non-renew.
Fail to Report Maintenance Issues
As a landlord, saving money is great, but not at the cost of your property’s condition. Tenants are responsible for reporting maintenance concerns as soon as they are noticed. Failure to do so not only causes more damage but costs more to fix. If this happens continually, they are not protecting your investment, so you need to step in and seek to find someone who will.
Does Not Follow the Lease Terms
Any instance of breach of the rental agreement is potentially a serious matter. Unauthorized occupants, undocumented pets, smoking, illegal activity, or disturbance complaints from neighbors should not be taken lightly. If the tenant signed the contract and then disregards their obligation, it is in your best interest to get them out as soon as possible and non-renew.
Refuse to Maintain Standards of Cleanliness
While there is no need to obsess over cleaning, it still needs to be done satisfactorily. A build-up of debris, trash, food waste, or belongings can draw pests and hide growing maintenance issues. Additionally, not properly disposing of grease can clog pipes, causing major repair costs. If a tenant refuses to clean up, take it as a sign to move on.
Unlawful Reasons to Non-renew Tenants in Your Rental
There are several options for landlords seeking to non-renew their tenants. That said, there are some instances where a non-renewal is unlawful, and knowing the difference is vital. To ensure you do not end up in an unintentional legal battle, avoid any attempt to remove a tenant based on the following.
- Discrimination – Discrimination, real or implied, is dangerous for landlords and can cost you dearly. Landlords are not permitted to treat tenants protected under the Fair Housing Act differently than any other individual. Simply put, you must treat every tenant the same! Landlords do have the right to choose between potential tenants or non-renew someone, but the reason behind it cannot be discriminatory in nature. If you are ever unsure of your rights as a landlord regarding Fair Housing, seek legal advice before taking action.
- Retaliation – Like discrimination, retaliation is a slippery slope for landlords and property managers. Landlords may not non-renew a tenant in retaliation to something that the occupant did or said. For example, if the tenant has reported you to a government agency or code enforcement, you cannot force them out because you are mad. Any attempt to do so can get you into a lot of trouble, and the tenant may be allowed to stay in the unit after all.
Your tenants need to feel good about where they live, especially if they intend to stay for an extended period of time. As the property owner, whether you enlist a property manager’s help or not, it is your responsibility to make sure they are nothing short of satisfied. At Bay Property Management Group, we understand that it can feel like a daunting task.
Are you looking for ways to keep your tenants happy, handle maintenance concerns, facilitate lease renewals, or deal with general outreach? Get in touch with a rental management company in Baltimore to learn how to boost your resident retention. At Bay Property Management Group, we have effective maintenance procedures to guarantee tenant satisfaction, the ability to regularly check in on tenants to ensure they are not having any issues, and the desire to collect and utilize any feedback we receive from your tenants. Our goal is to help you improve your property resident retention rates. Visit us online or call us today to learn more about our property management services throughout Maryland, DC, and Pennsylvania.