Why You Should Treat Tenants Like Customers

In almost every industry, the terms “customer experience” and “customer service” are always top of mind, but hardly ever do landlords and property management companies even consider their tenants as customers.

Turnover is when one tenant of a rental property moves out and the next one moves in, sometimes with time in between and most, if not all, rental owners agree that turnover can be the biggest operating expense. A bad turnover can literally wipe out years of profit in a real estate investment.

When a rental unit turns over, the owner has to pay for all needed repairs that are not covered by the security deposit and for updating the unit to make it rentable and desirable again. This can include catching up on any deferred maintenance, cleaning, advertising the unit, answering inquiries, showing the unit, screening applicants, signing leases, getting fees to property managers, all the while you watch the days tick by as your unit sits empty with zero rent coming in. On top of all this, most property management companies charge a placement fee for signing a new tenant which can be as much as the first month's rent!

Wits Property Management believes in treating tenants like people, not commodities and that these people are the lifeblood of our clients’ investment. If their overall experience is good, they will stay longer. If it is bad, they will leave sooner. Since many of my readers are self-managers, I wanted to share how we focus on the tenant experience to reduce turnover.

Don’t start with the lease!

The starting place for many self-managers to reduce turnover is creating a bulletproof lease as if the goal is to lock someone into staying. “Get them on the lease and pray you never, ever hear from them again” or so they say. The truth is that if a tenant leaves, it’s usually not even worth the time and cost to take them to court to recoup whatever your “bulletproof” lease says they owe you. Even then, it’s usually the case that they don’t have anything to take. So rather than trying to lock people into your properties, why not make it so they enjoy renting from you, prefer it, and want to be there paying for the product and service you provide? Do you really want to be the “Comcast” of rental properties? Why not go the Zappos-route and treat tenants like people you care about?

It’s about service

Rather than trying to tie up tenants in legal knots, focus on the service. By providing top-notch customer service, you can make back customer acquisition costs and cultivate a loyal customer base who will refer friends and colleagues and write customer reviews.

Happy customers are also more understanding when things break and are less sensitive to price increases. Investing in service helps activate your business’ “flywheel” because loyal customers who talk about your company will help you acquire new tenants, free of charge, which is significantly more effective than your own marketing materials and salespeople. So what does good service look like at a property management company? Well, it starts with communication.

After the lease is signed, send the new tenant a welcoming Acceptance Letter that explains the move-in process. On move-in day, rather than simply handing over the keys and an inspection sheet, sit down with them for a brief New Tenant Orientation. Some tenants may be leaving properties where the landlord made them pay for maintenance issues so they stopped reporting them. If that is the case, you will definitely want to educate them on how you’re different and that you want to take care of issues as soon as they arrive.

Another great thing to do on move-in day is to provide a welcome gift. You’d be surprised how far $20 will go in building a great relationship with a tenant.

Now that the tenant is moved in and you’ve won their trust, you have to keep it. Visiting your property a few times a year to check on things is a must! This shows the tenant (and for Wits Property Management, our clients) that you care, but many people go about this inspection in exactly the wrong way. They treat it like a raid and point out everything that’s wrong and make the tenant feel very self-conscious. While you or your staff are there, compliment your tenant on how the unit is kept, the nice picture of their family, the newer-looking furniture. Be proactive and check the detectors and change the furnace filters for them, even ask them if there is anything else you can do for them.

Here are a few other ideas on how to create a remarkable experience for your customers:

• Birthday gifts (send a $10 gift card from the local coffee shop)
• Lease anniversary gifts. Rather than just automatically sending out a new lease on the 10-month mark, delight them by offering an incentive:
  • “You've been working hard. This week, let us take care of the housekeeping. We will hire _______ cleaning company for a whole home professional cleaning on us.”
  • “Carpets need a refresher? We will have your carpets professionally cleaned.”
  • “Walls need some love? Let us help you out and repaint one room of your choice.”
• Reach out to local businesses and try to get some coupons for their goods and services for your tenants.

Again, these are just a few examples of how to build a great customer experience for your tenants and minimize turnover. There are many more, including more obvious things such as being responsive to maintenance requests, upkeep common areas, etc. By keeping the customer experience in mind, you reduce turnover and increase your bottom line.