All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Coronavirus Content & Resources Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Companies Hard Money Lenders Contractors Investment Companies

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
BlogArrowLandlording & Rental PropertiesArrow6 Reasons Good Tenants Don’t Renew Their Leases
Landlording & Rental Properties

6 Reasons Good Tenants Don’t Renew Their Leases

Larry Alton
Expertise: Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate News & Commentary, Business Management, Real Estate Deal Analysis & Advice, Real Estate Marketing, Mortgages & Creative Financing
104 Articles Written

If you've been a landlord for long enough, you've inevitably had an experience where you have a good tenant — things seem to be going fine — and then they surprise you by not renewing their lease. Aside from being costly, these situations are confusing. What makes these tenants leave?

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

6 Reasons Tenants Move on

Tenants fail to renew their leases for a number of reasons, but some are more common than others. Let’s discuss a few of these reasons:

1. Changes in Personal Situation

In many cases, a tenant’s personal situation may simply change. Maybe they’ve changed jobs, recently expanded their family, or are moving away to be close to a significant other. There’s nothing you can do about these highly personal situations, which often sneak up with very little warning.

2. An Expensive Rent Hike

Are you enacting an increase in rent? Even if it’s simply to keep up with the going rate, many tenants don’t like the idea of increasing a rent payment for the same property. For some reason, they’d rather switch properties and pay more. Psychologically, a new place seems to better justify the price increase.

If you absolutely have to raise rent, do so over time. Raising your rent by more than 10 percent is a surefire way to lose even your most loyal renters. If your rent is significantly below market value, tell your tenants. Then, gradually raise rent in increments each year. Raising rent 2–3 percent here and there will have a much less noticeable effect.

Related: 4 Tips for Finding World-Class Tenants for Your Rental

3. Poor Attention to Detail

Sometimes tenants simply get tired of dealing with your lack of attentiveness. While they understand that issues happen, they want to see you put forth the proper effort to correct them. For example, if the air conditioning goes out on a Friday afternoon in July, they want you to make as many calls as you can to get someone out there right away. Waiting until Monday and forcing them to suffer through the miserable heat won’t win you any bonus points.

4. Lack of Communication

This one goes hand-in-hand with the last point; lack of communication is a major cause for turnover. Not only do you have to communicate regularly with your tenants about things like maintenance, but you also need to speak with them about renewal well in advance to give them time to process things like rate increases or changes in lease terms.

5. Lack of Trust

What have you done to establish trust and rapport with your tenants? Do they feel like they can be upfront and honest with you? — Or do they sense that your only purpose is making money? Tenants want to be treated with transparency.

Related: 7 Ways to Be Landlord of the Year (& Retain Your Best Tenants!)

6. Problems With Neighbors

As we all know, bad neighbors can make for a miserable housing experience. Nobody wants loud, intrusive neighbors. If you have bad neighbors around, don’t be surprised when your tenants take a hike.

The Cost of Turnover

Experienced real estate investor Kevin Perk knows a thing or two about managing properties, so when he says that tenant turnover is the single biggest killer of cash flow, your ears ought to perk up.

“When talking about tenant turnover killing cash flow, I am talking about all of the processes and costs involved in moving a tenant out of an apartment, fixing it up, and moving another tenant in,” Perk says. These include administrative costs, advertising, showing the property, application costs, repair expenses, and, of course, lost income.

Related: What Is Rent Control—And Is It Bad for Landlords?

While you can’t retain 100 percent of your tenants, you can make sure you’re aware of the common causes of turnover so that you don’t do yourself a disservice.

What do you do to keep your tenants happy? Let me know in the comments section below!

By Larry Alton
Larry is an independent, full-time writer and consultant. His writing covers a broad range of topics including business, investment and technology. His contributions include
Read more
Larry is an independent, full-time writer and consultant. His writing covers a broad range of topics including business, investment and technology. His contributions include Entrepreneur Media, TechCrunch, and Inc.com. When he is not writing, Larry assists both entrepreneurs and mid-market businesses in optimizing strategies for growth, cost cutting, and operational optimization. As an avid real estate investor, Larry cut his teeth in the early 2000s buying land and small single family properties. He has since acquired and flipped over 30 parcels and small homes across the United States. While Larry’s real estate investing experience is a side passion, he will affirm his experience and know-how in real estate investing is derived more from his failures than his successes.
Read Less
10 Replies
    Erik W. Real Estate Investor from Springfield, MO
    Replied over 3 years ago
    Good thoughts overall. Attention to detail and communication are the two areas where I see a lot of my competition fall short. Have to disagree on not raising ASAP to market rent though. If your market rent is going up by 10% a year…raising only 2-3% just ensures you are losing a lot of money. Turnovers aren’t that expensive or time consuming if managed properly. In a hot market (can we all agree 10% market rent increases define a HOT market?), you simply must increase rates. Otherwise, you’re losing ground faster than gaining. And goodness knows what happens if you’re in an area that enacts rent control when you’re still 10-15% under market. Now you’re FORCED to take lower than market increases. Rent control is rare, but still a risk in hot markets. For most of us…let’s say we have a “warm” market going up 6% per year. At the end of year 1, you raise it 3% to keep your “good tenant”. Do that 2 more times and you’re 9% behind the curve, which is the same as losing an entire month’s rent. In a warm market you should be turning over in less than 1-2 weeks. Most of my vacancies are filled before the prior lease expires. Know the value of your units and market like a mad man. Don’t leave money lying on the table. I think some land lords are too timid when it comes to raising their rents and that’s how over 10 years they end up 20-30% or more below market.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    John Rives Investor from Birmingham, Alabama
    Replied over 3 years ago
    I have found most “good” tenants / qualified tenants are on their way to buying their own homes. By far the #1 reason I lose most tenants.
    Billie Miller Real Estate Agent from Denver, Colorado
    Replied over 3 years ago
    We have some tenants leaving for this exact reason. These are great tenants to have, because they are usually pretty responsible and pay on time, but they won’t stick around for forever, unfortunately.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    Jade S. Investor from Evans, Georgia
    Replied over 3 years ago
    Ditto…I’m in the midst of turning over two SFHs due to the tenants purchasing and/or building of new homes. Sucks because they’ve been pretty good tenants that have paid on time!

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    Chad Hale Property Manager / Investor from San Jose, CA
    Replied over 3 years ago
    Agreed sometimes poor management is the reason for tenants moving on. Those things can/should be fixed. If you are selecting good tenants and they are financially responsible, they will likely be moving on at some point to purchase their own home. Just received notice last week from a tenant with precisely this reason…

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    Jayla
    Replied over 3 years ago
    I agree with John Rives as a MD and DC licensed Realtor that many tenants leave to have their own homes, and their own privacy. Depending on the situation, if the tenants don’t feel that they have enough privacy, and freedom to do what they want, when and how they want, they’ll bail the first chance they get. There is nothing wrong with this, and it’s not something you can control. You can’t force anybody to stay in your rental property if they don’t want to, regardless of the reason. If they fulfill the contractual agreement of their lease, legally they don’t need a reason. I don’t see a little tenant turnover as a killer of cash flow at all. Big condo associations, and apartment complexes deal with this on the regular. Granted I will say it does create more work, time, energy, and effort on the landlord, and property managers part; but that’s about it. Unless the turnover is extremely high, and u constantly have people moving out, and nobody ever wants to sign more than a year lease with you, it shouldn’t be an issue. I believe one thing to do is to have a database of “leads” much like us realtors do to work with. That will definitely help in a down market, and/or if your turnover rate is higher than you would like. Overall, great blog post.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    Laurel Devine Investor
    Replied over 3 years ago
    I have been a landlord since 1983 and the last year, when a tenant (any tenant good or bad) says they are moving, I jump for joy. Rents are going up at a break-speed rate here in NJ. Every time a tenant moves out I raise the rent between $250 and $450 per month.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    John Murray from Portland, Oregon
    Replied over 3 years ago
    I live and invest in a city that is in a housing crises. If a tenant leaves I can shoot paint and new carpet in 1 week. It will be rented in a few hours sight unseen and charge another $200 to $300 per month. No big deal.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    Christy Browning Real Estate Investor from Denver, Colorado
    Replied over 3 years ago
    Thanks for posting, you have great points. On the communication end, my tenants recently pointed out that they would appreciate the ability to pay rent online. I have enrolled in Cozy’s rent payment system, no charge, and will see how it works starting next month. They appreciated my quick response and openness to trying something new they suggested.
    Billie Miller Real Estate Agent from Denver, Colorado
    Replied over 3 years ago
    We require automatic payment of rent through erentpayment.com. It’s actually a good screening question too. If an applicant balks at having rent automatically withdrawn that could be a red flag! If a tenant prefers automatic withdrawal, that probably means they will consistently have money for rent.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
Rotate Log in or sign up to comment

Related Blog Posts

Landlording & Rental Properties Jan 09, 2021

8 Reasons the Best Landlords Always E-Sign Rental Agreements

By Remen Okoruwa

Make the switch to electronic signatures and reap the many benefits—like a faster, smoother lease-signing process and easy access to signed documents (just to name a few).

Read more →

Landlording & Rental Properties Jan 03, 2021

6 Tips for Listing Your Rental Property Online

By Remen Okoruwa

No one drives around looking for rental signs on front lawns or scans the classifieds in the newspaper. Reach a massive audience by listing your rental online.

Read more →

Landlording & Rental Properties Dec 31, 2020

Meet the Investors: How I’ll Retire on Income From Just a Few Properties Featuring Ron Gallagher

By Alexander Felice

Learn from investor Ron Gallagher’s individual room to rent strategy and how he balances the pros and cons of property ownership.

Read more →

Landlording & Rental Properties Dec 26, 2020

The Top 6 Reasons Why Landlords Should Charge Late Rent Fees

By Remen Okoruwa

Many landlords have a tough time charging late fees—it’s hard to be the bad guy. But there are several reasons why you certainly should.

Read more →
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.