Even in the best of rental markets, it is often cheaper to retain a good tenant than to fill a vacancy. In a poor market, retaining your tenants is the only way to avoid losses.
One of the best lessons in property management is taking the time to calculate your average costs for replacing a tenant. Another piece of sage advice is to make yourself familiar with rents and vacancy rates in the units around you.
Armed with that information, you can make specific choices regarding how far you want to go in offering retention incentives.
Here are some tips from seasoned property managers on what works to retain your tenants:
1. Veteran manager Wallace Gibson, CPM writes: “I actually want tenants to vacate at least every two to three years so that the properties can be refurbished and updated. If properties are occupied LONGER than 3 years, then the down-time between tenants is too expensive. I end my leases on the third Friday of June and July so that I have anywhere from seven to ten days to repaint and recarpet for the incoming tenant. Owners who end on the 30th/31st often end up loosing an entire month since most people move in on the 1st. By allowing 7 to 10 days between tenants, I can save $$$ and keep the property rented.”
2. Spell out incentives in the lease so tenants have a goal to work towards. See Tenant Lease Incentives for some ideas, like a point system for timely rent payments that converts to a lease renewal rebate.
3. Keep the property in good repair. Keeping the landscape trim, the outdoor lights working and the faucets from leaking means that you care.
4. Allow some personalization of the unit. Minor modifications, like having a choice of wall colors, gives a tenant a sense of belonging. Decide ahead of time the range of colors you are willing to consider.
5. Communicate during the term of the lease. Tenants often feel neglected once they’ve moved in. Find ways to get in front of them on a regular basis outside of rent collection. Give out cookies, candy and compliments. “Thanks for paying on time. I appreciate it!”
6. Negotiate deals with local vendors for discounts for your tenants. Pizza delivery, movie rentals, the local car wash. Watch for new businesses that open nearby as they will want to advertise.
7. Offer an incentive for each time a tenant offers a suggestion.
8. Develop loyalty through seasonal parties, or seminars, like a talk on healthy eating, how to play the stock market, or how to draft a will. Set up leagues for sports, video games, and book clubs. Encourage them to bring friends to on-site events. If you have a single unit, offer a restaurant certificate on a birthday or special occasion for your tenant and a guest. Email flyers about events going on in the neighborhood.
9. Consider dedicating a sunny spot for a garden. Let tenants put down roots, literally, in a sunny spot. Provide drip irrigation. A shady area where grass doesn’t grow well is the perfect place of a zen garden retreat. Add decorative stone and a water feature. Meditative spaces can be very small, very low maintenance, and a highly effective way of keeping your tenants around.
10. Involve tenants in community functions. Publicize a walk/run for charity, and sponsor your ‘team’. Give out T-shirts, throw a victory barbeque afterwards. Publicize the money your tenants collected for the local humane society, toy drive or fire department by sending a press release to the papers.
11. Publish a community newsletter/blog. If you have single-family rentals, you can link your tenant community.
12. Find out well in advance if the tenant is considering moving out at the end of the lease term. Give yourself time to consider the tenant’s options and develop a counteroffer. If you cannot convert the tenant, conduct an exit interview so you can find out what would have made a difference for them. That way, you avoid having the same complaint from the next tenant. US Legal Forms offers a tenant exit interview worksheet. Remember, paid members receive a discount on forms.
Gibson Management Group, Ltd., is a full-service property management company offering 40 years of professional property management services and offers listings in the city of Charlottesville, Virginia and Albemarle County as well as Greene and Louisa Counties and the Lake Monticello area of Fluvanna County.
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