Keeping your tenants happy and renewing their leases is key to keeping your rental housing business and your revenue growing.
Our veteran investor, property manager and blogger shares a few of his secrets here.
By Larry Arth
I learned early on in the landlord business that I had to build a strong relationship with my tenants if I wanted long-term loyal clients for my rentals.
On the other hand, apartment owners and real estate investors who simply look at an investment property as a vehicle where the tenant pays their mortgage and generates them some positive cash flow tend to have tenants who move out annually.
When tenants feel or sense they are nothing more than a revenue stream for their landlord, they tend to move on quickly.
Here is my system:
No. 1- Let tenants know to expect rent increases in leases
Early on while interviewing, we would inform the prospective tenants that our aim was to retain a long-term rental. We did this by being totally transparent and saying, “Here is what we offer and here is what we expect. “
Within this information was a notation of an annual rental adjustment, letting them know up front that expenses rise each year and rents would also adjust accordingly. The objective here was to set the expectation for this rental increase so they were expecting it instead of defying it.
No. 2 – A discount for on-time payments
For one year of on-time payments we would offer tenants a 25% discount off their renewal amount. If rents were to go up by say $20, they would only be increased to $15. Small rewards go a long way.People like to earn their rewards and it shows that you do care about them. At lease renewal we would identify a renewal rate and the discounted renewal rate. Tenants loved striving for this discount. If they unfortunately were late a month or two, they were still offered an incentive for renewing if we wanted to keep them.
No. 3- A personal follow-up phone call
One month after they moved it, we would call and ask how their move went? Or, if there was anything they needed? Consistently we were met with gratitude and rarely did anyone feel they needed anything. They simply appreciated us reaching out to them. At the same time, it was the perfect opportunity to correct the path of any pending challenges.
No. 4 – Birthday cards and gift cards kept the bikes put away
Since we learned the birthdates of tenants when they signed a lease, we made it a practice to give the adults a birthday card and the small children a gift card for a free ice cream cone at the local McDonald’s. This one dollar gift is something the kids remembered forever and looked forward to each year. It also created a bond that would allow us to ask the kids to make sure they keep their bikes put away and simple things like keeping proper order to the place.
No. 5 – Renew your lease and receive handyman for the day
You can do this for a day, or half day, depending on rent value and/or property condition. Renewal time does not have to be scary and leave you wondering if they will re-sign or not.
Their expectation of a rental increase has been identified up front. If they paid their rent on time without any late payments they understand they will receive a reduced rental rate increase and now as a bonus if they renew they will have the opportunity to have some improvements done around the home. With your criteria established, these improvements will only add value and are going to be less expensive than tenant turnover. We did things like add shelves, paint a room, perhaps add a built-in microwave. You set the criteria here and zero in on items that should add value and rentability to the property. This has always been a great win for me.
No. 6 Referral money opportunities for tenants
When a vacancy did appear we would send out letters informing tenants there was going to be a vacancy coming up. It would be a chance for them to help pick out their new neighbor.
It would say something like, “We like to have great tenants like you, and as you are a great tenant, your family and friends are likely a match to live in our friendly community as well. If your referral meets our renting criteria and we rent to them, you will receive $100.”
This created a source of great prospective tenants and served to let the current tenants know we appreciated them. It also gave us a list of future tenants, as we often received more prospects than we had available rental units. People are now lining up to rent from us. This has helped to keep our vacancy rates very low.
No. 7 The little things make a difference
These little differences in how we manage our properties have people wanting to stay and rent with us. As families outgrew their homes they would ask us if we had any other properties that were bigger, as they wanted to maintain our relationships. Their friends were always inquiring about renting from us. We have great reputations as property owners who care about their tenants. As a result, the only time people moved is if they left the area or if they bought a house.
You have all heard of, or personally live, the pride of ownership. When you can create this same type of pride for your tenants, you have created a great partnership that will have them renewing their lease. A person’s home is their castle. It is theirs independence. Even though they do not actually own the apartment or home, you want them calling it their home. When they feel great about where they live and are happy with it, they will call it their home and they will treat it like their home.
When you show you are genuinely interested in a happy partnership with your tenants, you in turn will find happy tenants who maintain the property and pay on time. Then you have a successful business.
About the Author:
Larry Arth is a landlord and the founder and CEO of Equity Builders Group, a Florida based Real Estate investment Group. As a 36 year veteran to real estate investing, Larry understands that we are now in a global economy and as times have changed, investment strategies must change as well. Larry is an international recognized consultant and speaker and assists hundreds of investors per year, both foreign and domestic to realize their investment potential. He analyzes locations across the country for economic strength and the locations that yield the largest most sustainable return on investment. Within these locations he seeks out and gathers the best teams to deliver sound, high performing and most importantly sustainable turnkey investment. He works with investors to ride the wave of each area-specific market surge. Larry’s primary focus is offering (Non Listed) safe and sustainable turnkey investments to the passive investor.