15 Jun How to Retain Good Tenants
A good screening process is the most important thing you can do in property management. Putting the right people in your property is the next most important thing you can do, otherwise you could be in serious trouble down the line. Don’t let quality tenants slip away, instead actively pursue the renewals of your best tenants.
Keeping Good Tenants
Many property managers wait around for their renewal period to send renewal offers to their tenants, often at a higher price that was not expected by the tenant. Some even sneak in clauses that automatically renew the lease unless the tenant opts out. This can really upsets good tenants, maybe even landlords that are upset that rent is under market value. The anger of tenants would be justified. If you have these clauses, it may be severely limiting your customer base. If you auto-renew without the tenants knowing, they won’t like you and probably won’t rent from you again or refer you to any friends or family.
Before Lease
Actively pursue the renewal from the beginning. Give them the expectation that their rent will most likely be raised in 12 months. If you set this expectation early, most people will not be upset. People tend to get upset when their expectations are not met. You can blame it on inflation, the Fed or outside forces if you feel it necessary.
During Lease
Next, throughout the lease, make sure you fulfill your role well. Address their maintenance request promptly and with quality service. Answer their questions and concerns quickly. Some PM companies engage residents on social media, some have coupons available. I have lived at a complex where the management held different barbeques and parties for residents. Things like this are not necessarily important, but it is nice to give residents opportunities to interact with you and get to know you and your company well.
Toward End of Lease
The renewal pitch for good residents, those who pay on time and are not hard to handle, consider starting the lease renewal process at 6 months before the end of the current lease. Some companies offer what they call a “locked-in rent price” for renewing early. Think, a lower rent raise such as $25 instead of $50 or $100. Try again in a couple months as well.
Next, a few weeks before the renewal deadline, reach out again with different options to fit their needs. That could be a 2-year lease or month to month options. Month to month is not usually the best option to offer up front, but could be offered with some stipulations, such as an extra premium on top of the base rent. Month to month rent is far less stable than a longer lease, and makes it hard to raise rent.
Trying to convince the good tenants to stay is important. Don’t let good tenants walk because they think they have to upon the end of their lease. If they are going to leave, though, don’t forget them. If they have to move out of town, or are buying a home, it could be a good time to ask for a good online review to help boost your presence online. Mostly, only angry people leave reviews, so asking someone who was happy with your service can help balance the scales.
You could ask them to allow you to show the property while they are still living there, or give them a small incentive payment if they leave before their lease is up. This could help shorten turnover time and save you money.
Conclusion
More lease renewals means less vacancies. Less vacancies mean more income. After all, that is why you do this, to make money! Actively, but wisely pursue renewals with your good tenants. Take care of them and don’t sit on your haunches. Being proactive in these matters will only help you!
