The worst thing for any landlord is having a vacant property. Not only does vacancy mean no money is coming in, but landlords also have to invest time and money in finding new tenants. That said, the strongest rental businesses have low turnover among their tenants. This keeps their cash flow steady and reduces costs. But many Prince George’s County landlords struggle with keeping great tenants. Today, we’ll review five tips to reduce tenant turnover and improve rental profitability.
5 Tips to Reduce Tenant Turnover and Improve Profitability
The ultimate goal for most landlords is to keep their rental properties occupied at all times. However, it takes work to get to that point. If you have high turnover rates and spend too much time advertising vacant rentals, it can eat away at your profits. That said, here are some strategies landlords and property managers in Philadelphia can use to reduce tenant turnover.
- Get Feedback From Your Tenants
- Make Regular Improvements
- Review Rental Increases Carefully
- Attract Tenants Who Are a Good Fit
- Ask for Referrals
Get Feedback From Your Tenants
Before you can fix any problem, you need to know the problem. For instance, do you know why your tenants leave at the end of their leases? You may have some ideas, but unless you ask for regular feedback from your tenants, you won’t know their concerns and issues, if they have any.
Whenever a tenant gives notice that they are moving out, part of your process should be sending them a short survey. In the survey, ask the tenant to rate their experience and why they will not renew their lease.
You may find some painful truths.
Maybe the property isn’t as well kept up as others in the area, or perhaps the rent is out of step with other similar properties. In some instances, the tenant may have an issue that is simple for you to solve, and you may be able to convince the tenant to stay. However, even if the tenant is determined to leave, you can gain valuable insight into how the tenant felt about the property and their tenancy.
Remember that you don’t have to wait until a tenant wants to leave to get feedback. You can ask for feedback with a short written or online survey anytime, but asking too often will make it easier to ignore the surveys. That said, try sending a survey two times a year. Tenants will appreciate being asked for their opinions, and you will be able to spot trouble before it’s too late.
Make Regular Improvements
Nobody likes being ignored. One of the most common points of friction between landlords and tenants is a lack of response to repairs and improvements. Sometimes, even conscientious landlords try to put off improvements in an attempt to maximize profits.
However, keep in mind that investing in regular improvements, and not just repairs, can reduce tenant turnover and even increase the amount you can charge in rent. Additionally, when tenants see landlords trying to improve the property, they feel better about the rent they pay and living there.
One important part of making regular improvements is communicating the value of the improvements to the tenants. For instance, tell tenants why you are making improvements and how those improvements can make their lives better. The rental market in Philadelphia is very competitive. Give yourself an edge by showing your tenants how much they mean to you.
Review Rental Increases Carefully
Landlords and tenants are faced with a basic conflict of interest: landlords want to charge as much as possible in rent, and tenants want to pay as little as possible. That said, the market for rent in Philadelphia is everywhere. In turn, this can lead to tenants constantly being on the lookout for better deals.
It is standard practice for rent to increase every year or two. However, wages often do not increase with the same regularity. So, when you are seeking to maximize your profit by increasing your rent, you need to make sure the increase is in your best interest.
Questions you should ask when evaluating a rental increase include:
- Can your tenants afford the increase?
- Are other comparable units priced lower?
- How long will it take to fill the vacancy if you lose a tenant?
- How much does it cost to fill a vacancy?
- Will the rent increase make up for these costs?
Rent increases are one of the most common reasons for tenant turnover. Before you raise your rent, make sure you consider what doing so may end up costing you in the long run.
Attract Tenants Who Are a Good Fit
One of the best things you can do to reduce tenant turnover is to make sure you are renting to the right people to begin with. Remember, not all tenants are the same. So, before filling a vacancy, you need to consider what kind of tenants are best for your property.
Finding the right tenant is more than just ensuring someone has good credit. After all, you will deal with your tenant for a long time. So, you need to make sure you are accepting tenants who will be a good fit with your personality and style as a landlord.
If you can interview a prospective tenant, you will get a better sense of how they conduct themselves and if they will be a good fit for you.
If you invest more time upfront to find the right tenants for your rental property, you won’t have to invest nearly as much time and money to fill vacancies when tenants decide to leave (or you are forced to evict them).
Ask for Referrals
If you already have a few great tenants and you want more like them, the thing to do is ask those tenants to refer their friends. We all tend to associate with people like ourselves. Your tenants will not want to ruin their reputation with you by referring someone who is a flake.
While there are never guarantees, you improve your chances of getting great tenants by having your existing tenants search for you.
The act of asking for referrals also bonds your existing tenants to you. It shows them that you respect them and like having them as tenants.
Not only is asking for referrals a good way to find solid tenants, but it is also a way to improve your relationship with your tenants and reduce turnover (and offering a referral incentive doesn’t hurt either).
Find High-Quality Tenants With Property Management
Relationships with tenants are more art than science. It often takes years of experience to find the right mix of tenants for your property. That said, once you find the right tenants, your business will be more stable and profitable if you work to reduce turnover and keep your tenants happy. If you follow these tips, you will see turnover fall and your profits rise.
Building strong relationships with tenants can take time, especially if you’re busy managing a large portfolio of rental properties. However, with the help of professional property management, you can ensure each property is well-maintained and tenants have their needs taken care of. If you’re looking for rental management near Baltimore, Philadelphia, Northern Virginia, or Washington, DC, contact Bay Property Management Group today!
