7 Tips for Reducing Tenant Turnover
How investors with rental properties can find tenants who are in it for the long haul.
Rentals are a flexible, short-term solution for most tenants, making them prone to frequent turnover. For real estate investors, the constant revolving door is often a headache.
It takes time and money to find the right tenants. Plus, every day the home remains vacant is a day you’re not getting paid.
Here are seven tips to follow if you want to find and hold on to high-quality tenants.
1. Find Reliable Tenants Who are More Likely to Stay
Begin with high-quality tenants who are probably interested in sticking around.
For example, if you’re renting out a single-family home, try to find a family with children. Moving is a hassle, especially for bigger families with more belongings. Chances are, a family with children will also be more invested in staying to avoid changing schools.
Make sure you complete a range of different screenings as you’re reviewing applications for potential tenants. From credit reports to references, this is an important part of the process. A high-quality tenant in good financial standing is more likely to have long-term potential. Just be sure to follow federal fair housing laws when it comes to the screening process.
2. Incentivize Long Leases (or Renewals)
It may slightly reduce your return on a property, but small discounts are nothing compared to the overall cost of turnover.
Consider enticing tenants to sign on for an 18-month lease instead of a 12-month lease by lowering the monthly rent.
In addition, you can offer incentives towards the end of a tenant’s lease to entice them to sign for an additional year.
The cost of jumping from rental to rental can add up quickly with all of the initial fees and deposits that are due up front. This is a great way to convince your tenants to stay.
3. Keep your Rental Prices Reasonable
According to Pew Research Center, renters across the U.S. have seen rental prices rise by 18% over the last five years. This exceeds the rate of inflation in every region but the Northeast. Knowing this, it’s important to be respectful of your tenants.
Stay in line with the local market as you’re setting prices for your rental properties. While you may be able to get a little extra cash for certain upgrades, it’s still important to remain competitive.
Tenants usually have a good idea of what they’re looking for and how much it will cost, especially during times of economic uncertainty. Keep your prices reasonable to avoid losing tenants you value.
4. Provide A Personalized Experience
Go above and beyond to show your tenants that you care. After all, they’re living in your house. Do what you can to get to know them — and show your appreciation from day one! For example, leave a welcome basket with snacks and other essentials in the unit on move-in day.
You can also set a calendar reminder to drop a note with a gift card in the mail every year to say happy birthday. Even $5 towards a cup of coffee can go a long way when you want to say ‘thank you.’
5. Respond to Issues Promptly
Whether it’s a plumbing issue or unexpected pests, it’s important to respond quickly. Let tenants know that you’re aware of the issue and you’re working on getting it resolved as soon as possible.
Next, get in touch with the right professionals to address the issue. You should always maintain a long list of electricians, plumbers, and other types of handymen in the area. This will ensure you can get someone out to the property in a timely manner.
6. Update your Property Amenities
Open the lines of communication and ask your tenants if there is anything they would change about the property. Perhaps the interior needs a fresh coat of paint or new carpet. Maybe simple “smart home” upgrades like a video doorbell or alarm system would be appreciated.
Ask your tenants for ideas when it comes to property upgrades and amenities. If you agree to a certain improvement, work with them to make sure the work is performed at a time that is convenient.
7. Make the Rental Process Effortless
We live in a paperless society that embraces a streamlined technological approach to nearly everything. Make sure you’re giving tenants a way to pay rent online, especially on an automatic basis.
Take it a step further by offering an app or other program to submit maintenance or service requests. This will also make the communication process easier on your end.
Overall, tenant turnover results in lost time and money. Long-term tenants will lead to steady income with minimal effort. Remember, going the extra mile to keep great tenants leaves more time for other investment opportunities.
Luke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers, and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the L.A. Times, and more.