Any landlord or property owner knows that one of the most expensive parts of a rental business is tenant turnover. Therefore, finding ways to increase tenant retention is one of the most important things a landlord can do. That said, while finding a great tenant takes work, keeping them around requires just as much, if not more, effort. At Bay Property Management Group, we understand that top-notch customer service is just one of the keys to lasting tenant satisfaction. However, ensuring resident satisfaction can seem like a daunting task, which is why we are here to help owners with practical tips you can begin applying today! So, continue reading for our list of effective ways to increase tenant retention rates below.
Why is Tenant Retention Important?
Tenant retention is a critical part of a healthy and profitable bottom line. By maximizing ways to increase tenant retention, landlords save money, and therefore, crucial profit. In fact, consider these costs below that landlords will avoid if they retain their current tenants –
- Marketing – Posting listings can add up quickly from as little as $50 to several hundred.
- Leasing Fees – If landlords employ a leasing staff or use a realtor to fill units, the leasing fee can range from several hundred dollars to the first month’s rent.
- Vacancy Time – From start to finish, the average unit turnover and marketing process leaves a unit vacant for around 30 to 45 days or even longer. That means one to several months of no rent coming in.
- Turnover Costs – Average turnover costs within the industry land around $2500. However, depending on a wide variety of factors specific to the property, this number could climb significantly higher.
- Time – Do not forget that as a landlord, your time is valuable. So, avoiding tasks such as creating rental listings, property showings, tenant screening, managing repairs, and conducting inspections means time is freed up for other business or personal tasks.
Top 10 Ways to Increase Tenant Retention
A happy tenant is a long-term tenant and for landlords, keeping fantastic residents in place is like hitting the lottery. However, unlike in the lottery, landlords can do plenty of things to increase the odds of success in keeping their tenants satisfied. So, check out our list of the top ten ways to increase tenant retention rates below.
- Pre-qualify and Screen All Tenants
- Make Maintenance a Priority
- Offer Lease Renewal Incentives
- Keep Rental Rate Increases Consistent and Fair
- Be Professional but Understanding
- Track the Pulse of the Local Market
- Provide Top-Notch Customer Service
- Take Time to Call
- Send an Exit Survey
- Hire a Professional Property Manager
Pre-qualify and Screen All Tenants
If landlords do not start with a qualified and quality tenant, retention rates will be the least of their worries. Tenant screening is the most important part of the rental process and has a measurable impact on the potential turnover rate. In addition to income, credit, and criminal background verifications, requesting and following up with former landlord references is critical.
Early detection of tenants who could cause damage to the property, break their lease, or pay rent late will help property owners to begin the lease with the best possible option. So, ask references open-ended questions such as –
- Were rent payments made on time and in full?
- What was the monthly rental rate?
- Describe how the tenant maintained the property?
- How did the tenant communicate with you?
- Would you rent to this tenant again?
Make Maintenance a Priority
Keeping up with maintenance repair requests is essential for any rental business. That said, being proactive in scheduling annual and routine service for major systems in the property goes a long way to avoiding those dreaded emergency repairs. Besides keeping your valuable investment in tip-top shape, regular maintenance is one of the best ways to increase tenant retention. Furthermore, when an issue does arise, address the tenant’s concern promptly and keep them informed throughout the repair process. Caring for your property shows the tenant you care about their experience as well.
Offer Lease Renewal Incentives
The end of a tenant’s current lease is a critical time for property owners. After all, the tenant is weighing their option of whether or not to stay in their current rental. While there are instances when outside circumstances such as job changes influence the tenant’s decision, it is still a good idea for landlords to put their best foot forward. For example, consider partnering with local gyms or cafes to offer special promotions or deals to tenants. Another great option is to offer a monetary incentive for renewing, such as a discount on the renewal month’s rent.
Keep Rental Rate Increases Consistent and Fair
Profits are essential for a rental property business. That said, being overly aggressive with rental rates and increases will likely drive tenants away instead of encouraging them to stay. While tenants expect periodic increases, maintaining ask references open-ended questions is key.
Therefore, instead of increasing the rate at every renewal, take time to research local comps and ensure your property does not outpace similar rentals. So, consider keeping the rate just under market rates and only requesting smaller increases. This means that cost-savvy tenants will be hard-pressed to find a better deal and, therefore, more willing to continue their current lease.
Be Professional but Understanding
Landlords must uphold and enforce the terms of the lease. However, the COVID-19 pandemic has presented a multitude of issues that both tenants and landlords face. Therefore, a certain level of professional understanding is necessary for extreme circumstances. For example, if an otherwise great tenant begins paying late or misses a payment, reach out and check-in. If they have lost their employment or fallen on hard times, attempt to work with them to find a solution or alternative payment plan.
Working together towards common ground allows tenants to see just how much you care and goes a long way to foster a strong landlord-tenant relationship. Furthermore, making adjustments in emergencies to keep great tenants in the rental is worth it, considering the cost and hassle of finding a new tenant.
Track the Pulse of the Local Market
As a landlord, understanding and keeping track of local rental rates is just one part of the process of retaining tenants. One of the best ways to increase tenant retention is to monitor amenities and upgrades in the local market along with the price. If your property is outdated and costs more than one down the street, what incentive does a tenant have to stay where they are? So, try to view the neighborhood from the perspective of the renter.
Provide Top-Notch Customer Service
One of the most straightforward ways to increase tenant retention rates is through responsive and honest communication. That’s right, customer service is a vital part of property management! Beyond efficiently processing maintenance requests and responding to tenant inquiries, landlords must ensure tenants have all of the information they need. This starts at move-in with a comprehensive tenant welcome packet outlining procedures, contact information, and property-specific tips.
When issues do arise, respond as soon as possible and within the same business day. Then, during the maintenance or repair process, keep the tenant informed of progress, so they understand it is being handled appropriately. As a landlord, establishing relationships with trusted vendors helps you respond to repair needs faster. Proper maintenance and top-notch customer service are essential to increasing tenant retention.
Take Time to Call
In the rental industry, many communications are best sent in writing, and many require it by law. However, when important notices or emergency reminders go out, consider picking up the phone as well. Doing so allows landlords an opportunity to answer questions the tenant may have or ensure they receive pertinent information regarding their lease or rental unit. Although this step is not necessary, tenants appreciate the personal connection that conversation provides.
Send an Exit Survey
Although the goal is to retain tenants, one day, inevitably, tenants will move out. When that occurs, it is a good chance to send them a shot but pointed exit survey to improve your rental business. Consider asking some of the questions below –
- Why have you decided to vacate?
- What would you have liked to see from the property manager?
- Were you satisfied with the property? Why or why not?
- Is there anything that could have enticed you to stay?
Hire a Professional Property Manager
Hiring professional property management is one of the best ways to increase tenant retention and ensure top-notch customer service for every tenant. At Bay Property Management Group, our dedicated staff of property managers and support personnel put the needs of our clients and tenants first. We understand that tenant retention begins at the very first meeting and continues through every landlord-tenant interaction. For owners looking to take their rental business to the next level, relying on a local firm’s expertise can assist in maximizing profit potential. Give us a call today to learn more about our full-service approach to rental management.