6 Simple, Profitable Strategies Most Landlords Don’t Use (But Really Should!)

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When Matt and I began investing 11 years ago, we took all the courses and read all the books – as most newbies do! We did everything we possibly could to avoid making mistakes as newbie landlords. However, no matter how prepared we tried to be, we did end up making plenty of mistakes. And hey, that is okay. We learned from these mistakes and continue to learn.

Hi, all! Liz is back this week to discuss some simple yet powerful strategies that have helped us be more effective landlords. As many of you would agree, property management is not easy. I don’t know any landlord who is perfect and thinks of everything. Recently we revised and updated our “policies and procedures” for property management. As I was reviewing all of the things we do during this process, I thought it would be helpful to share the things that most landlords don’t actually do — but that, if done, dramatically help out business. I hope you enjoy this list!

Related: The Top 12 Things I’ve Learned From 12 Years as a Landlord

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6 Simple, Profitable Strategies Most Landlords Don’t Use (But Really Should!)

1. Provide a Tenant Appreciation Program

Although we did not begin this program until last year, it has been one of the best things we have ever done. How the program works is that during the tenant on-boarding process, we give the new tenant a document (among other documents) that explains this “tenant incentive.” We run this program on a quarterly and yearly basis. Each quarter, we pick a name out of a hat of a tenant who has paid their rent on time for every month of that quarter. The name that is drawn gets a $50 Visa gift card. Then on a yearly basis, we have one big contest and put in the names of every tenant who has paid their rent on time for the entire year.

About a month ago, we drew the name of the winner for 2014, and the yearly winner received a 42 inch flat screen TV. It was one of our tenants who has been with us the longest. Ironically, this was a tenant who was having a lot of financial difficulty a couple of years ago. We worked with her and put her on a payment plan. We are very clear with our tenants what happens if they miss this payment plan. However, she never did. She got herself current and has paid her rent on time ever since. The coolest part about this story was that she owned a very small (and almost broken) TV. When she found out the award was a brand new flat screen TV and that she had won, she cried. When our team delivered her the brand new flat screen TV, she was so thankful and appreciative.

As a result of implementing this program, tenant retention and communication has increased and tenant loyalty has improved. Not bad for a $500 investment!

2. Create a Video Walkthrough

Another strategy that I wished we had implemented when we started is using video walkthroughs as a marketing strategy. I don’t need to tell you how powerful video is. But I did find some research and came across some fairly powerful statistics from a website called DigitalSherpa:

  • Videos increase people’s understanding of your product or service by 74%.
  • YouTube is the number two search engine in the world.
  • A third of all online activity is spent watching video.
  • The average internet user is exposed to an average of 32.2 videos in a month.
  • Every day 100 million internet users watch an online video.

All I have to say is “wow!” Finding these statistics makes me want to use video even more in every aspect of our business. What we have been doing from a marketing perspective is creating a 2 minute video walkthrough of the unit. Then we upload the video to YouTube and put the link in all of our marketing flyers and craigslist/online ads. I can tell you — it helps. I had one woman who called and was excited to schedule a showing to see the unit. She immediately told me on the phone that she was impressed with the unit after watching the video walkthrough. If you are not technically competent, don’t worry. I am not either, and I figured out how to do this! So can you!

3. Measure Leasing Effectiveness

Since the last six months, we have been measuring the effectiveness of leasing units. We have been keeping a record of the following data for each unit that we need to lease:

  • Date unit is listed (online and offline)
  • Contacts: How many calls/emails received
  • Showings: How many showings and/or attendees of open houses
  • Applications: How many applications received

We have been working hard to capture this data for each unit and building, so we can begin to have a clear indication of our numbers. Our goal is to lease a vacant unit within 30 days. As a result of recording these numbers, we have also been able to determine how well we are doing with leasing. Bottom line, this helps the manager/landlord keep a real eye on their leasing strategies and have real data to change course quickly to get a unit leased with great tenants.

4. Contact Previous Landlords & Current Employer

I have seen a lot of landlords on BP discuss the importance of this step. But I have also seen a lot of landlords skip this step in a rush to get a unit leased! Over the years, we have been guilty of this, too! However, this step is critical and is a step we have not been skipping lately. The key is to not only call the previous landlord(s), but to also call the current employer. I know the good hearted landlords out there want to believe that these prospective tenants tell us the truth. However, the key in evaluating tenants is to ensure they are giving you accurate and truthful information.

Most recently, we received an application for a single family home we own in Trenton, NJ. The tenant looked good on paper and actually made acceptable income based on the employment information. She came in with the application completed and a deposit to hold the unit. When my husband called the “previous landlord,” the woman on the other line did not sound like a landlord and sounded more like this prospective tenant’s friend (acting as a landlord). After running this person’s credit report, two evictions came up on her report. Based on our criteria, we ended up not accepting her application. I can’t stress it enough: Never cut corners when evaluating tenants!

5. Follow Up With Tenants Right After Move In

Like most landlords, you can get very busy putting out fires and dealing with maintenance requests from tenants. It is very easy to forget to follow up with new tenants unless you have something to tell them or they call with some problem. Our team has been implementing a two part follow up process, and it has been working out really well. The first proactive follow up is one week after the tenant moves in. The purpose of this call is to simply ask the tenant how things are going.

We actually have created a script for our team. Here are the questions we ask:

  1. How did your move go?
  2. Have you transferred your utilities?
  3. Do you have any questions about any of the documents in the lease package?
  4. Do you need anything from us?

The other purpose of this call is to check in with the tenant in case there is anything outstanding that they need to get to us. The next follow up that we schedule for every new tenant is sending out a 4 week follow up letter. The purpose of this letter is to remind them of the most common rules that tenants break (noise, smoking, not transferring utilities to their name, etc.). With both of these proactive communication follow ups, the key is to stay in front of new tenants and ensure they understand the rules (before they have had time to break them) and that they feel taken care of. Most landlords do a terrible job of following up with their tenants. This strategy will help you stand apart from these landlords.

Related: 6 Insane Landlording Stories That Prove the Importance of Tenant Screening

6. Offer Multi-Year Renewals

We only began offering multi-year lease renewals recently, and we are kicking ourselves for not doing this sooner. The only reason we began offering multi-year leases is because we had a tenant ask us if we offered them. We told her that we had never done that before, but were open to it. We signed a 3 year lease with her and then decided to offer this to all tenants during renewal. Here is how we approach it:

  1. We send a 90 day letter informing them that their lease will expire on X date. We then offer three options for renewal – 1 year, 2 year, or 3 year. If they go with the 1 year renewal option, they will get a 3% increase (which is already stated in their lease). If they sign up for the 2 year renewal, the increase drops to 2.5%. And if they sign up for the 3 year lease, the increase drops to 2%.
  2. If we have not heard back from the tenant by 60 days, we send out another letter reminding them we need an answer.
  3. If we have not heard back from them by 30 days, we send another letter and call them to determine their intentions.
  4. On the renewal date, we send an “automatic renewal notice.”

Over the last few months, we expected to get a small percentage of tenants who would sign up for the 2 or 3 year renewal. However, our team was shocked at how many multiyear renewals we have received. Remember, people love to save money. Give them a reason to save money, and they will likely take you up on it!

I hope one or more of these ideas will help you as you become even more effective as a landlord. I would love to hear from you!

What other strategies do you do that most landlords do not?

Leave your best tips and stories below!

About Author

Matt Faircloth

In 2005, Matt founded The DeRosa Group along with his wife, Elizabeth. At the time, the two person company owned and managed two assets – a single family home and a duplex. Over the last nine years, they have grown the company to a 12 person team owning and managing over five million dollars in residential and commercial assets throughout the central NJ and Philadelphia area. One of DeRosa’s mantras is “to make money while making a difference.”

51 Comments

  1. Another question – Is your tenant incentive program based only on rent received on-time or do you use other criteria as well (keeping the apartment clean, no noise violations, etc)?

  2. Andrew Emery

    We are about to hopefully have our first duplex close in May. I’m sitting here with my note pad taking notes. I’m trying to figure out how to the gift card thing with two tenants, lol no, I’m just kidding.
    Excellent read.
    Thank you for taking the time to write this.

    • Elizabeth Faircloth

      Andrew,
      Congrats on closing your first duplex soon!! Glad to hear these suggestions you found helpful. Yeah the gift card “drawing” would be a little hard with two tenants! However, you can certainly find ways to create incentives on a smaller scale. Something we did when we started out was give every new tenant a welcome basket. It was a nice touch.
      I hope your closing goes well!
      Liz

  3. Jerry W.

    Liz, very nice points. I can see how some of them could pay off very quickly. I agree with you that calling the last landlord is very important. I have not been as good about calling the current employer. Most of the ones I have gotten recently had been because they had moved here for the new job. Since I have not had many coming for a new job lately I need to be more active on this. I am seeing some evictions on folks who lost their job and would not want to get one of those.

    • Elizabeth Faircloth

      Thanks Jerry for your comment! Yeah it really is important to call both the current employer and previous (and even current) landlord. It is great to reach out to as many folks as the prospective tenant gives you! I know how hard this is sometimes!
      Good luck!! And thanks again for commenting!
      Liz

  4. David Krulac

    We’ve been doing multi-years leases for quite some time. Vacancy is a cash flow killer, We’ve had tenants stay as long as 30 years. I just rented a place that had been occupied by a 21 year tenant, who I sold a house. I told that new tenant that people like to live here and he has to stay 22 years to beat the old tenant.

  5. Ricky Williams

    First term of lease – I always aim for a 2-year lease or a lease timed to end in summer, whichever is longer. This helps ensure that renters are folks that aim to be there a while.

    Regarding renewals – we have been doing the multi-year renewal option as well. Usually offer a 1-year or a 2-year renewal, with the 2-year being about $25 less than the 1-year. Usually point out in the renewal offer letter that the 2-year option cannot raise rent for 2-years – drives home that there is savings in the first year and even more savings in the second.

    However, we are wondering if multi-year renewals is a good idea. We are seeing rent go up such that the rent increase after two years of being flat may seem a little excessive to renters. This is even though we purposefully offer them a rate at a clear savings to open market. So, we have been debating whether to continue offering 2-year renewals.

    While one could say that a vacancies are expensive and can be reduced through multi-year leases, so is renting for two years at a rate of $200 less than market rate.

    One other factor is what the long-term plan is for the property. While we purchased ours as very long-term rentals, if the housing market reached crazy prices, we might would decide to sell. It is much easier to sell to owner occupants (which will pay more than rent metrics dictate a property is worth) if the renter doesn’t have to be paid off to move out.

    • Elizabeth Faircloth

      Ricky,
      Thanks for your response and comments. You raise some great points here. I agree that you have to be continually monitoring your rental rates, rental increases as well as monitoring the market. We have actually found it helpful for some of our units to price them slightly below market to retain tenants as well as fill vacancies. I would also agree that the multi-year renewals have to align with the long term strategy of the building.
      Thanks for writing and sharing your thoughts.
      Liz

  6. Daniel Ryu

    Sounds like you guys do a very professional job of managing your tenants and rental.
    I like how you track the metrics and offer the lease renewal options.
    Thanks for the tips!

    And love Matt’s videos too ^^

  7. Westin Hudnall

    Very inspiring. I own 10 rentals purchased in the past 3 years that I self manage with a lack of systems in place.

    Would you feel comfortable PM’ing me and sharing your policies and procedures page to help get me on the right track ?

  8. Kevin Vincent

    Very insightful article. I’v been doing property management for several years and am now doing rentals as one of my REI strategies. I really like the rewards program you have, but I do mostly SFHs to quads, and so it might be hard to implement it exactly as you do. I will try to formulate something similar (I’ll post it once I do). I’m definitely going to implement the “Welcome Basket” idea (maybe a welcome to the neighborhood pie, hehe).

    • Elizabeth Faircloth

      Hi Kevin,
      Great to hear! Please do post how you make out on the rewards program you create. The key is to appreciate and create incentives for your tenants. Everyone likes to win something and everyone likes to be rewarded!
      Good luck and please keep me posted!
      Liz

  9. Brandon Stevens

    Nicely done, a very good artilce for all of us landlords. We use the you tube route religiously on our properties, it really saves us time. After viewing the video i’d say 90% of the people who visit the property after they view it wish to put in an application as opposed to we figure about 65% prior to us implementing this. We all surely have btter things to do that show apartments to people who don’t want to rent them 😉

  10. Elizabeth,

    Thanks for a great article and thank you to the BP readers who also commented.

    I must be on another planet or maybe its my demographic (Millennials) but I don’t think that I would ever give up the option of raising rent for a year.

    If a tenant is demanding and a pain in the arse, I raise his/her rent. If he/she is reasonable and let me enjoy my life, I might not raise his/her rent for a year to reward them.

    I never give away gift cards or any such thing, I guess because I don’t need to. My demographic tends to be very spoiled and if they don’t respect me or my property…THEY ARE GONE! I don’t put up with much and a sure fire way to get them out in a year is for them to leave a profanity filled v-mail for my spouse and I tell them so!

    My letter:

    Thank you for your tenancy over the last year. After careful consideration, My spouse and I have decided to go in another direction. Your lease expires on X date. We will begin showing the apartment immediately per the terms of your lease.

    Regards,
    X

    I have actually made a profit on turning over apartments, so I don’t mind throwing out tenants at all. I average $200 per turnover by getting a new tenant. That’s right, I make money turning over the apartment AND I raise the rent at least $25 over what the last tenant was paying and still have a line of applicants on the day I have an open house.

    The best was when a snotty Millennial left a profanity-filled v-mail for my wife. After receiving our letter (see above) she begged to stay in the apartment, so I told her to call my wife and plead her case. She told my wife that she wasn’t going to be able to find a comparable apartment for the same rent that has an in-unit washer and dryer. My wife’s response was “I’m sorry, but our decision is final”. We began showing the apartment the next day.

    • Elizabeth Faircloth

      Thanks James for your comments and reading the blog post!! I agree with your point about raising rent, and how you would never give up the option of raising rent. Just to be clear – we raise rent regardless of which renewal option the tenant chooses. We do provide an incentive to those who sign for a multi-year lease (as explained in my blog post) and see great benefit in doing so. As shared, we charge a 3% increase for a 1 year lease renewal vs a 2% increase for a 3 year renewal. To put this in a real situation – say the rent is $1000. If they renew for 3 years, the increase will be 2% which is $240 (annualized). If they only renew for 1 year, the increase is 3% which is $360 (annualized). The difference is $120 (annualized). Although I would be losing $120 for the discounted 2% increase, this is well worth it to us and we gain a lot more in return. I would much rather avoid having to market a vacant unit and retain a tenant long term. I would lose more than $120 in our time to market and lease the unit!
      Good luck to you!
      Liz

      • Liz,

        I get what you are doing and it sounds like it is working for you.

        I guess I like the option of being able to throw out a tenant in a year’s time, if I need to, plus I like raising the rent 3% every year. My good tenants are usually fine with this and those that aren’t leave. I’m not comfortable being locked into anything longer than a year and I never have any trouble re-renting units. Believe it or not, most of my tenants stay an average of 5 years, then buy their own place.

        Thanks again for your reply and well wishes!

        James

        • Elizabeth Faircloth

          Thanks James for your note. I certainly see where you are coming from. That is what is great about this business. Different strategies work for different people. This business would be boring if we all had to approach it the same way! Good luck to you too and all the best!!!
          Liz

  11. Joshua Springer

    Multi year leases are definitely a must offer! I only have a few properties so far but have had half my leases be multi year! Obviously you have to vet the person pretty well ahead of time but if you do your job right you should feel comfortable leasing for very long periods of time.

    Most people forget that tenants hate moving as much as we hate finding new tenants 🙂

    • Elizabeth Faircloth

      Completely agree Joshua! I just wish we began doing this sooner. Hey – you live and learn in this business! 🙂

      And you are absolutely right – tenants do hate moving as much as we hate finding new tenants!!

      Thanks for reading and commenting.
      All the best to you!!
      Liz

  12. Elizabeth Faircloth

    Michael,
    Congratulations!!! All the best with your first rental property. And kudos to you and your wife for doing it together. I love when I hear of couples investing together! It puts a big smile on my face.
    Good luck to you and let me know if I can help you!
    Best,
    Liz

  13. Kim Vandermark

    I am so happy to have read this! We (my husband, son and I) just purchased a duplex-our first rental property- and this information will be very helpful as we enter the upcoming steps of getting and keeping the units rented. Right now we are in the rehab phase (very overwhelming!) but I am gathering information for what I need to do to find, and keep, quality tenants.

    Thank you for sharing your experiences and strategies. I love your company mantra of making money while making a difference-that’s what I believe in, too!

  14. William M.

    I just want to say that you are a landlord I aspire to be. The idea came from Mayor De Blasio’s agenda. I would love to be apart of his affordable housing agenda given my net worth I have to start private though. I think tenants who are good to you and try to be good deserve incentatives. Thsee are some good tips.

  15. Robert Leonard

    Lots of good ideas in your article. I’m following some but not all of them!

    My follow up always happens 7 days after they move in when I pick up the “move in inspection checklist” that I give them. It’s the record that we agree on about the condition of the property when they move in. It gives them time to check to make sure that everything works and I make on the spot corrections if needed or we have notes of any blemishes or minor imperfections that they don’t get blamed for at move-out.

    About utility transfers – I require that as a prerequisite to move-in. They have to provide receipts for transfers/turn-ons for all utilities when we meet to sign the lease or when we meet to handover the keys and walk through the property. At the walk through, I go over things they need to know like locations for all cutoffs in the event of an emergency.

  16. Chad Hale

    Thanks for the article! Lots of good info and follow on discussion.

    I used to do one year leases but have moved to month to month. This is working in the San Jose area because of the increasing housing rates and high demand. If a problem tenant slips through the screening process, I can “simply” issue a 30 day notice. All of my recent (past 2.5 years) vacancies were filled in less than 1 week. I think you need to tailor the system to the area.

    For retention/appreciation, around Christmas time, I send my tenants a hand written card saying thanks and gift card. Otherwise, simply being responsive to issues and treating tenants like human beings seems to go a long ways.

    Again, thanks for the thoughtful and helpful article.

    chad

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