The 5 Most Common Reasons Tenants Leave Your Rentals

by | BiggerPockets.com

Why are renters leaving your units? What can you do about it?

Tenants are on the move. What are the most common reasons they may leave your rentals? How can landlords prevent these moves to keep good tenants, maintain consistent cash flow, and maximize cash flow?

The 5 Most Common Reasons Tenants Leave Your Rentals

1. They want to move somewhere cheaper.

Housing costs, especially rents, have been rising for the last five years. Some are just at the point where it makes sense to move somewhere cheaper where renters can get a lot more for their money. It could be that local rents have just gotten too high—or maybe your rents in particular are too high.

Market rents change over time. Be sure you stay tuned into local trends, even when you aren’t actively looking for tenants. If neighboring properties are leasing for 30% less than yours, that could become an issue. Price your properties right. Invest in stable and upcoming locations with more room for growth.

tenant-screening-tips

Related: Tenant Turnover Can Wreck Your Profits: Here’s the Simple Solution to This Costly Issue

2. They’re afraid of changes in the rental situation.

Sometimes tenants leave just because they are afraid. They may be afraid of how much they think you are going to raise the rent when it comes time to renew. They could be afraid you are going to evict them because they’ve fallen a few days behind on rent a couple times. Or it could be that a tough new property manager you’ve brought in is causing panic in the renters.

Set clear expectations. Get feedback from loyal, long-term renters you trust when you bring in new management, connect with them about renewing leases early, and maintain property upkeep to show tenants you’re a caring landlord, not a slumlord.

3. They need more space.

Between a growing number of multigenerational households and Millennials’ growing families, many simply need more space today. A lot of people jumped on the minimalist lifestyle after 2008, but now, years later, they are tired of living so tightly and cramped. In fact, a Realtor.com survey shows that this is driving far more Millennials and Boomers to choose single family homes in the suburbs over homes in dense urban centers or condos.

4. They want to buy a home.

With rents more expensive than mortgage costs in many areas, interest rates low, and credit scores recovering, many are making the leap to buy homes while it is still so attractive. If you can’t stop it, make the best of it. Ensure a good exit service. Return deposits and ask for a review on the spot. Still, if you can, get them to buy their home from you.

tenant-funnel

Related: 13 Things Tenants Don’t Understand About the Rental Process

5. They don’t like the neighbors.

No one likes scary or abusive neighbors—and they are out there. This is something to keep in mind when searching and screening rental properties. It is also important to keep lines of communication open and to listen to these complaints. If there are problem tenants in your own neighboring units, you probably won’t renew their leases. If they belong to another landlord, you may want to preempt issues by contacting the other landlord.

Summary

There are a number of reasons good tenants can leave, even if they like the units they are in. Smart landlords will get out in front of these issues and find ways to keep those tenants in their property to avoid turnover costs.

What are the most common reasons tenants leave your rentals? How do you minimize the effects of those reasons?

Leave your comments below!

About Author

Sterling White

Sterling White started in the real estate industry at a early age back in 2009. The company he co-founded Holdfolio is a real estate crowdfunding platform based in the Indianapolis market. Before founding Holdfolio Sterling and partner Jacob Blackett were involved in the purchasing and selling of 100+ single family homes nationwide. In his free-time he trains for a World Record.

9 Comments

  1. Apart from moving to take a job in another community or buying a home, most tenants leave a rental because
    1) The condition and lack of timely maintenance of the rental itself
    2) Unreasonableness or experiencing disdain from the landlord
    3) Landlord raising the rent too high too fast, or landlord thinking that replacing worn out stuff is a “remodel” that justifies raising rent. Corollary: landlords who seem to think raising the rent is always justified even though wages are NOT increasing, and thus they disqualify their own tenants from making more than the required 3 times the rent.

  2. I had a tenant move 3 months prior to the end of the lease once when I told them I would be selling the property after their lease was up. Caught me by surprise but I ended up selling right after they left anyway.

    • I do not blame your tenants one bit. Being an inherited tenant is as difficult as inheriting one. If your community is like mine, it could take all of three months to find a new place.

  3. Eric Petersen

    The younger and more independent people you rent to the more likely they is to move more often. I have two properties I rent to single, young professional / student men in their early 20s to early 30s. This group moves a lot! They are great because you can rent a single family home by the room, thus increasing rents, however they almost are guaranteed to move at the end of the lease because they want to try something new. Some strategies I have noticed to keep people like this is to 1) make the lease 1 year at least 2) keep the rent just a little bit lower than the competing units near by 3) maintain the property accordingly as these tenants have been in houses where they are basically falling apart and the extra effort helps them appreciate what you are doing for them and 4) try to rent to a group of friends as they will most likely stick around longer because they feel they have a great thing going.

  4. Pamela H Kinzey on

    Mine almost always leave because they’re broke, or because someone is trying to find them. And that’s usually because they’re broke. They lost their job. They had a medical bill. They got injured. They’re sick. Their relatives need their money. They bought a lemon used car. They got docked for credit card debt. Fines from the law. Fees from the lawyer.

    • LuAnn Miller

      Pamela – sounds to me that you need a better system of background check for your properties. Have you thought of using the MySmartMove website recommended by Bigger Pockets? It has been amazing for us so far. The prospective tenants pay the processing fee and if they balk at that, they may not make enough to sustain and the background check will bring this to light. Try it out.

      • First how much is the processing fee?

        Second, whatever the fee is, some tenants may balk because they do not like giving out so much personal financial info to a property manager. Given the staffing turnover, it is not at all clear whether the information is secure or not. Considering that IRS refund thieves get the info necessary from somewhere to file a return before the real person, it is not an idle concern.

        • Jon Schmidt

          Hi Katie,

          I recently set up an account as a Landlord with MySmartMove (a TransUnion service). I then elected to send a request to the tenant applicant (you enter their email address into the website) to complete a MySmartMove application. You specify whether you will pay the fee or have the tenant do so. I found the service to be very easy to use and useful information.

          The tenant enters sensitive information into the site and you never see it. After I accepted their application and approved them as tenants we met to sign the lease and I collected SSN and DL# to have in the case of an eviction.

          I hope that helps.

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