Finding great people to live in your house or apartments is critical for on-time payments, someone who takes care of your asset instead of destroying it, and having peace of mind as a landlord. So how do you keep these people, year after year after year? We know of one property manager whose average tenant stays 4.5 years!
Tuesday, June 16, 2009
Wow! How Much Can You Save?
Can you imagine the cost savings? If your average tenant stays 1.5 years, let’s look at the turnover cost over 4.5 years on a unit that rents for $1,000 per month.
Lost Rent 1 Month @ $1,000Rent-ready costs (not covered by deposit) 250 Advertising, signage, etc. 50Total Cost every 1.5 years $1,500x 3Total Cost Over 4.5 years $4,500
If you can get your turnover rate from 1.5 years to 4.5 years, you save $3,000 or $1,000 every year! If your cash flow is $200 per month, you just saved almost half of your cash!So, how do you keep these great tenants that you found and put into your properties? Let’s look at a few simple ideas.
Basic Tenant Retention Strategies
Treat Your Tenants Like Clients. They are your customers and should be treated as such. Your goal should be that your tenant feels good about your property and their relationship with you as a landlord. Good customer service includes:
Polite communications. Even for late fees, 3 day pay or vacates, etc. Most tenants will pay what they owe, so communicate politely and professionally.Accurate billing and statements. A confused tenant will not feel good about paying anything. Would you?Rewards for Good Behaviors- Provide a discount for on-time payments instead of a late fee for late payments, give a rent rebate for referrals to other properties you own, and provide positive feedback on good property inspections. Why dwell on the 2-3 things that may need to be improved when there are 50 things that are well maintained and in great condition?Reduced Rent Increases- The next time contract renewals come around, bring the tenant’s on-time payment record with you. Talk to them about the “regular” rent increase rate and then reduce it based on their on-time record. Even consider NOT raising rents. Remember, it costs about 1.5x monthly rent if someone moves out! Is a 5% rent increase always worth the risk of a good tenant moving out?
Advanced Tenant Retention Strategies
Thank you gifts. Say “thank you” with a gift at the holidays or a birthday (you have their birthday from your application, right?) for your best tenants. Let them know that you appreciate them and they are one of your best tenants.Tenant Rewards. Sign up for a tenant rewards service like blackledger.com to reward your tenants. The cost to you is minimal and your tenants win big.
“That’s it! I’ve had it! Let’s sell this place!”
It takes time, people skills, market knowledge and patience to be a good landlord. Sometimes it makes sense to own real estate, but you don’t want the hassle of being a landlord.
If that sounds like you, don’t call your real estate agent. Contact Clear Day Property Management instead. With a 94% occupancy rate for single family homes and an average turnover rate of 2.5 years (and climbing), they can take all of the hassle out of managing your property. Call them at 801.725.9044 and ask them how they can take the weight of property management off of your shoulders and put it onto theirs.