It’s cheaper to keep a good tenant than it is to find a good replacement or to carry a vacancy. Both in residential and commercial real estate rental, your bottom line is directly impacted by how well you maintain a strong renewal rate. Here are five straightforward things you can do to keep good tenants for a long time.
- Leverage Technology: It’s easy and valuable to provide simple technological conveniences for your tenants, who have no time to waste on physical procedures if an online system can do the job.Offer an online option to pay rent directly through your website and also through a direct withdrawal from a tenant’s bank account. Send invoices, receipts and reminders by email. Offer online document signing (especially for that lease renewal). Send emails when packages arrive for tenants.Also consider programmable thermostats that tenants can control from their phones. Explore security systems with the same capabilities. The more you can supply, the less a tenant has to install, and the less desire to move elsewhere.
- Offer Periodic Free Cleaning: Reward tenants explicitly by the length of their stay. Offer a free maid visit every 3 months, and a deep cleaning every 6 months. Schedule a carpet cleaning or a hardwood refinishing every year. Offer a new carpet every 5 years or the gift of an area rug in the case of wood floors.Adjust these time periods to suit your situation. Cleaning is a maintenance item that prolongs the life of your property, and if you treat it like an operating expense, you’ll establish offers and time periods that work for you.Communicate each reward with something like “You’ve been with us for six months now, so we want to do something for you.” Staying in touch like this throughout the term of the lease affirms your appreciation and means you won’t suddenly appear like a stranger offering a gift at renewal time.
- Discount Rent: Surveys on rental incentives consistently confirm that tenants care more about money than any other benefit. Find a way to offer a rent discount to good tenants who pay the rent on time every month.How long is your vacancy period on a unit? If it’s one month, take a month’s rent and divide it by 12. This is the monthly benefit you can afford to give to a tenant who stays with you. Don’t offer a rent-free month, but reduce the monthly rent by the monthly benefit. This way the benefit is tied to tenure, which is the way you should be looking at all costs of tenant retention.
- Communicate: Make sure your tenants know how to reach you and when, and provide them with ample opportunity to give you feedback – and then be responsive to it. You can’t hide negative feedback on review websites, so resolve issues as they arise. Proactively solicit input: Ask for feedback with every reward you offer, and provide a comment box both physically and on your website.Use maintenance as a chance to communicate. Offer your handyman and contractor services at all times for tenants who want help with installing fixtures, custom design or other such individual touches.Handle emergencies responsively. Contact tenants who have problems as quickly as you can, and don’t be afraid to ask how critical the fix is; if tenants have time in hand for a solution, they’ll appreciate knowing you’re trying to manage the crisis in the most suitable way. Put genuine emergency procedures in place – if you’re going to strive for authentic dialog with your tenants (and you must), then you have no room for phony promises. A good rule of thumb is to keep tenants over-informed rather than under-informed.
- Offer Signing Incentives: If you have incentives you offer to attract new tenants, give these gladly to existing tenants who renew their lease. Show your appreciation for loyalty here. Surveys suggest that tenants value gifts that make fundamental improvements to their quality of life rather than consumables or entertainment items. This works for you as the property manager, since investing in a new floor, coat of paint (their choice of color) or kitchen appliance is a far smarter gift for your property than a television given away to a temporary inhabitant.Tenant retention can be enhanced by steps that both re-invest back into your property and protect your income by rewarding tenure over vacancy. There are many practical and affordable ways to pursue this.
By: Copley Broer (IREM Blogs)
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