Every day that your property or unit remains vacant is another day that you aren’t getting paid. Having long periods of tenant turnover can seriously hurt a real estate operation. Don’t let this happen to you. We have curated a list of 5 tips to help you minimize tenant turnover, and therefore maximize profit.
Find Good Tenants
How finding good tenants minimizes tenant turnover:
Good tenants are typically ones that are long-term renters, consistently pay on time, don’t damage your property, and are overall low-maintenance. Finding — and keeping — the ideal tenant can take a little extra work, but it’s worth it in the end.
The biggest way that good tenants minimize tenant turnover is by staying longer. Having one good tenant who occupies your unit for three years costs you a lot less than having three mediocre tenants who only stay for one year at a time. What’s more, a good tenant will do their best to keep your property looking nice, meaning that you’ll have less repairs and cleaning to do once they leave.
How to find good tenants:
- Research your ideal tenant. You should know who you’re looking for and what they want out of a rental property. Giving prospective tenants what they want will attract them to your property and encourage them to stay.
- Market to your target demographic. Using listing sites, social media, and newspaper ads will bring in prospective tenants. Make sure that your choice of marketing attracts the type of tenant for which you’re looking.
- Complete screenings. Once you start collecting applications, complete thorough screenings. Tenant screenings should cover credit reports, past landlord checks, employer checks, and county level criminal checks.
- Keep the tenants. After you’ve locked down a good tenant, do what it takes to keep them. Respond to requests promptly, stay up on maintenance, and only raise rent when it’s appropriate.
Upgrade The Property
How upgrading the property minimizes tenant turnover:
A smart way to keep good, long-term tenants even longer is to upgrade the property. Tenants are less likely to leave if you put in the work to keep them happy. It doesn’t need to happen all at once, but every now and then, you should offer to upgrade some aspect of the property. Staying up to date on appliances, flooring, paint, etc. shows that you value your tenants, while also increasing the value of your property.
Even though updating your property will come with an up-front cost, you will be able to adjust rent accordingly. Updating incrementally throughout a tenants stay will also give you less work to do once they move out.
How to upgrade the property:
- Pick your tenants. The goal with updating units that are currently occupied is to keep the tenants renting them. Only offer special upgrades to tenants who you think deserve it and who you hope to stay.
- Assess the property. Figure out what could use an upgrade and what’s fine as it is. You can even discuss with your tenant what they would like to see updated.
- Begin upgrades. Start with what needs updated the most. Then move on to the requests of your tenant.
- Adjust rent accordingly. You shouldn’t hike up your tenant’s rent to exorbitant prices, but it is okay to ask for a little more over time. Remember, you’re trying to minimize tenant turnover here — you want them to stay.
How giving discounts minimizes tenant turnover:
Giving discounts to new tenants — or even pre-existing tenants at the time of lease renewal — is an expensive way to show your tenants that you care. You can either research and curate a list of discounts offered by local businesses or buy a coupon book specific to your area. This is an especially thoughtful gesture for tenants who are moving in from out of town.
Little things like giving out discounts can be the difference between you and your competitors. Showing tenants that you value them and their business will make them more inclined to stay with you, rather than moving on to a different property.
How to give discounts:
- Find the discounts. Whether you choose to put together a list of discounts yourself or buy a book of coupons, make sure that they can be used in your area.
- Give out the discounts. You can give them out on the day of signing or on move in day. For pre-existing tenants, you can give them out as their lease is running out as an incentive to renew, or you can hand them out as a thank you for renewing. It’s up to you when you will hand out the discounts.
Collect Rent Electronically
How collecting rent electronically minimizes tenant turnover:
As our world becomes paperless, people want to pay for things online. Rent is no exception. Paying online is faster, easier, and more convenient than sending in checks or cash. Offering tenants the ability to pay online will set you apart from your competitors and act as an incentive for lease renewals.
Collecting rent online also saves you time and money. You don’t have to manually count cash, write receipts, wait for checks to clear, or do your own bookkeeping. Using property management software to collect rent electronically does all of the hard work for you. It even enables tenants to automate payments and allows you to send payment reminders, which minimizes late payments.
How to collect rent electronically:
- Pick a property management software provider. There are many providers on the market, each of which offer varying products and services. Shop around and find the one that best fits your needs.
- Set up. Getting set up with most property management software is easy, and there are resources available to you if you need help.
- Share the payment portal with your tenants. Property management software provides a platform for tenants to pay online. They can typically choose between ACH/eChecks and credit cards as their payment method.
Remember Special Dates
How remembering special dates minimizes tenant turnover:
Remember special dates such as birthdays, anniversaries, and holidays is one of the little things you can do to set yourself apart from other landlords. Whether you send out a text/email or give out a small gift, recognizing special dates shows your tenants how much you care. Going that extra mile is what will encourage your tenants to continue renting with you.
How to remember special dates:
- Collect the dates. For pre-existing tenants, you can send out an email with a form attached asking for the dates of birthdays, anniversaries, etc. You can include the form in the signing process for new tenants.
- Set reminders. A great way to remember when a date is coming is to set a reminder. You can do this on your phone, write it on your calendar, or any other way that will help you remember.
- Recognize the date. For smaller occasions like birthdays or anniversaries, an email or text on the day of will likely be enough. For bigger holidays, you could consider giving out a small gift to all of your tenants.
Tenant turnover is a hidden cost for any rental business. It’s not something many landlords regularly build into their projections. It’s tied to but separate from a vacancy rate and the bottom line is that it’s expensive. You want to reduce tenant turnover. Good, long-term tenants mean steady manageable income and less effort on your part. But don’t think that long-term tenants just appear out of thin air. Sure, you can hit the jackpot, but you have more control than chance conveys. Take some of the steps above to increase your chances of retaining good tenants for the long haul. You’ll thank yourself when you have more time and money for your next investment.