Tips To Reduce Tenant Turnover for Newbies
One of the greatest accomplishments as a property owner is that moment you hit full tenant capacity – not a single unit unoccupied. It may seem like a breeze now that you’re collecting rent checks and basking in the glory of positive cash flow, but one of the biggest challenges facing landlords is constant tenant turnover. Luckily, there are ways to prevent surprises come lease renewal time.
Sure your tenants typically sign one-year leases but if you’re continually turning over those rentals year after year, you will incur a lot of unnecessary expenses that will cause you to dip into your rental property income. Those extra costs add up when you’re looking at advertising costs for finding new tenants, the time commitment to show the property, cleaning and repairs in between tenants, and the lost income for any days the property is not occupied. One of your top priorities as a landlord should be selecting the right renters and building strong relationships with them so that lease renewal is a no-brainer.
Refine your Tenant Selection Process
Finding and ultimately keeping the right tenants always starts with the tenant selection process. While you will inevitably be looking at specific details in a potential tenant’s application to be sure they are a quality renter, it’s easy to identify a few clues that a new tenant might stick around for awhile.
Check out their rental history. Have your potential new tenants typically moved every year or are there large blocks of time they’ve stayed at one property? Is the tenant in a rush to move in for some reason? Always give preference to potential new tenants that appear to prefer staying at their rental properties for more than one year. It’s pretty easy to spot an apartment hopper if you ask for at least five years of rental history.
Also, it doesn’t hurt to look at the potential tenant’s work history for clues. Someone that moves jobs frequently may also not like living in the same property for extended periods of time. And if a tenant is continually seeking out new jobs they may also need to relocate to a new city or area of town, which means they may even try to terminate their lease early.
A tenant screening can be done through popular landlord websites, property management firms, or property helper services.
Be Responsive with Current Tenants
One of the top complaints of tenants is a landlord’s lack of responsiveness. We’ve all been there. Your toilet won’t flush and the owner of the convenience store downstairs is greeting you by name as you pop in to use their bathroom for the 10th time this week, all before your landlord even calls you back. Or maybe that water stain on your ceiling has grown from quarter-sized to the size of one quarter of your entire apartment ceiling and your landlord keeps swearing he’ll be over to fix it. Don’t be that landlord.
Not only is this irresponsible behavior for a landlord, your tenants will be quick to start looking for a new place as soon as that lease is up. And this will leave you scrambling to find another tenant. If you don’t have a lot of time or don’t live near your property, just hire a property helper service that can be sure your tenants are cared for 24/7. Not only will you be able to rest easy, you’ll be doing a lot less work in the long run if your tenants are happy residents.
Don’t Raise the Rent Too Much at Once
Of course raising the rent of your property is part of maximizing your rental income, but if it comes at the expense of you losing good tenants you may want to think twice. It’s reasonable to raise rent as the market value of a property increases or as inflation rises, but jacking up the rent over $100 every year on a low or middle income unit is going to send your tenants packing.
Do your research because you can assume your good tenants have done theirs. What are similar properties in the area renting for? How much have they increased since last year? What are other tenants in your building paying? When you do have turnover, where are you setting the rent for new tenants? Inconsistencies that can’t be explained will make your tenants question if they are paying a fair price, and could potentially lead to them leaving.
Reducing tenant turnover can be an easy task if you take the right steps from the very beginning of the tenant selection process. Keep your eyes and ears open to clues that a tenant might be a serial apartment hopper. Take your time with the applications and go with your gut. That combined with fair rental costs and consistent service to your tenants, you should be able to find and keep quality tenants for a very long time. Of course this translates to a lot less effort and a lot more money for you, which is why you entered this crazy world of property investing, isn’t it?
In the interest of disclosure, the property helper service listed here is my business.
Happy to answer any questions or hear your thoughts on the blog.