Most investors purchase a property with a certain rental $$$ expectation in mind. $400 per month, $600 per month or $1000 per month — it doesn’t really matter unless you can get someone to pay that amount to inhabit the property. We all know that finding and keeping those tenants is the key to making all those ROI numbers work.
I have said many times over that you make your money, your true return, when you buy and not when you sell. A buy and hold is the only way to make a residual income that can be calculated and even secured by your investment potential. All of this being said, be proactive. Manage your longterm business on the front end.
Here are 3 Tried & True Ways to Keep a Tenant Staying & Paying
Tip #1: Be Responsive
Communication with your tenant will make or break your investment.
If you want to stay hands off, ensure that your property management company is engaged and makes regular visits. I have witnessed investors lose the entire property due to vandalism and vacancy because they were not communicating or making regular visits to the property.
Even in great areas where rents for a SFH are high, life happens! Couples split up, people lose their jobs and family members become ill — and in all of these scenarios, resources can become strained, and pride can get in the way, so you may never know until it’s too late.
The family you had living in your $1200 per month SFH with 3 beds and 2 baths who were just there 2 months ago, but didn’t mail you a rent check this month are nowhere to be seen. When you do visit your property, a man who goes by “Uncle Chuck” and his two hounds are staying to “keep an eye on it for you.” Needless to say, this can be avoided by simply developing a relationship with your tenant and checking up at least twice a month.
Tip #2: Stay Energy Efficient
When you purchase the property or after a tenant vacates and you have a breather, spend the extra money and insulate the walls and attic space.
The average 1,200 sq. ft. home is not adequately insulated, and we have great, inexpensive products out there to do so. By filling in the gaps in the walls and by laying down a nice bed of the blown-in-stuff in the rafters, you will greatly reduce the heating and cooling cost of the property.
One of the most common excuses that I got when the weather started getting colder was that the tenant had to pay a heating bill, so they couldn’t afford to pay the rent. In some areas you can’t even evict a tenant in the winter months. Keeping the bills low by insulating ensures that the rent is paid in full and the tenant stays longer.
Tip #3: Keep Plumbing in Check
The most common and costly issue to deal with is a plumbing fix. The emergency rates that most plumbers charge compare to the rates of my Cardiologist. Even if the solution only takes 15 minutes, you still get charged for at least an hour with the service call on top of that.
Again, be proactive. Replace the water feed lines with PEX, and put in plenty of shut off valves for repairs. Replace the waste lines with PVC, and ensure you have at least one clean out. Seal the toilets with caulk, seal the drain connections with plumber’s putty, and cap off any unused gas lines.
Re-plumbing a home usually takes about 3 days with PEX, but the money and time are well worth every penny. It only takes one call at 2:00 a.m. with a screaming tenant because water is “just spraying from everywhere!” and getting the $1,000 bill days later to really clear your thinking.
Some of these tips may seem costly, but the potential return lost to future maintenance issues if these areas are neglected is much higher!
These three tips were learned the hard way — by paying the price of not being proactive. Like I stated above, keeping tenants happy and paying is the key to ROI. The area, the property class, multifamily or single family – it’s all the same. Reducing your risk on the investment at the front end WILL make you more of a return with fewer 2:00 a.m. phone calls, and to me, that is PRICELESS!
What steps do you take to keep your tenants happy?
Leave me a comment below!