Tenant retention is one of the main goals for investors who own residential rental properties. The stability of your business relies heavily on high tenant retention rates, so it’s in your best interest to make tenant satisfaction a priority.
There are several steps you can take to make sure that your tenants both finish their lease terms and renew their leases. Read on to learn more about these best practices to improve your relationships with your ever-important clientele.
Ways to Increase Tenant Retention
Meticulous Tenant Screening
Property owners need to screen their tenants thoroughly to ensure that they will rent to people who are capable and compliant with making timely rent payments, following the rules of the lease, and taking proper care of the rental unit. You can use criteria like credit score, employment verification, eviction history, criminal background, debt-to-income ratio, and more.
Fair Lease Agreements
Having a fair lease agreement will boost tenant retention since renters want to stay in a rental property that values its occupants and ensures they are treated well. Write clear agreements to avoid misunderstandings and avoid including unreasonable terms to keep tenants satisfied. Fair terms and rules actively encourages tenant loyalty.
Excellent Tenant Communication
Having an open-door policy in your relationship with your tenants is essential to enhancing tenant retention. Keeping an open line for addressing maintenance requests promptly and keeping tenants informed about pertinent matters will positively affect tenant satisfaction. This alone can encourage lease renewals from tenants.
Lease Renewal Incentives
It can significantly reduce the tenant turnover rates for your property if you offer lease renewal incentives. These incentives also boost your rental business through word-of-mouth marketing when current tenants tell prospective tenants about the benefits. Some of the most common incentives include rent discounts, cash gifts, or discounted parking.
Property Upgrades
Upgrading your rental with sleek, modern amenities helps with both tenant retention and making your property more enticing. Enhancing the living experience in your units even allows you to raise your rental rates justifiably.
It’s always a good idea to get tenant feedback too! Conducting a survey on what kind of improvements your tenants would like to see is a fast track towards making them feel valued.
Payment Options
One of the most basic tenant retention strategies involves making their lives more convenient by offering flexible rent payment options. Modern tenants expect digital convenience, which is why accepting online rent payments can enhance tenant satisfaction and reduce frequent tenant turnover.
Maintenance and Repairs
Successful property management will go a long way in tenant retention, which includes responding to property maintenance requests and repairs promptly and efficiently. This can establish a good reputation for your business, which is crucial in a competitive rental market.
Tenant Feedback
Your tenants feel valued if their suggestions are genuinely considered. This starts with assessing tenant satisfaction by asking for direct feedback. This helps you gain insight into things like property upkeep, thoughts on rental rates or leasing fees, or general property management. It vastly contributes to your strategies for resident satisfaction, which leads to retaining tenants.
Flexible Lease Terms
Not all tenants have the same needs. Some may need a more long-term residence while others need shorter duration stays. Having flexible lease terms may seem counterproductive, but this can widen your tenant pool, which means you'll have lower vacancy rates.
Positive Community
Creating a positive community where tenants can interact with each other comfortably is a good way to keep them from finding it elsewhere. You can achieve this by providing a place for them to mingle like common rooms, or hosting events during special occasions or holidays.
Extra Effort
Property managers can go the extra mile by making small gestures like providing gifts during holidays or communicating with tenants outside of business. Renters will perceive you as an approachable landlord, and they will be more open to relaying tenant inquiries which can ultimately help your business.
What Happens When You Have a High Turnover Rate?
Since tenant retention rates affect rental income, your business will start to suffer when you’re constantly dealing with turnovers and vacancy. Some property owners solve this issue by themselves, but you may need to consult the experts. Once your portfolio hits a certain size, property management becomes a necessary investment for most landlords.
Why is Tenant Retention Important?
Tenant retention creates a more stable rental income first and foremost. It also minimizes the costs that come with finding a new tenant such as creating rental listings, marketing, and tenant screening. Another overlooked factor is how retaining tenants can solidify your reputation as a landlord. High retention rates show prospective tenants that your property is a good choice for long-term stays.
How Are Tenant Retention Rates Calculated?
The formula for tenant retention rates is (Number of Lease Renewals ÷ Total Number of Tenants at the Term Beginning) x 100. The average tenant retention rate is at 48%, but going under 60% is considered too low. If you're having trouble with this matter, you could try hiring property managers who already have experience in the field.
Can Local Market Conditions Affect My Retention Rate?
Yes. Landlords sometimes need to make rent increases to keep the business afloat, and some tenants may have no choice but to opt for cheaper options no matter how much they want to stay. There's not much you can do in this regard, but following good tenant retention practices will reduce the likelihood of this happening.
How Professional Property Management Can Help You
A lot of thought and effort goes into retaining tenants. You sometimes need to go above and beyond your standard management duties as a landlord, and that can be taxing in the long run. Fortunately, there are experts out there who can do all the heavy lifting for you.
Property management companies like us at Performance Asset Management have the expertise to handle the day-to-day operations of your rental business, as well as handle unexpected circumstances like tenant turnover. Contact us any time for a free consultation with our investor-focused team!
