Real Estate

Good tenant retention

All residents of your properties should be treated as your business partners, as they are responsible for income, expenses, and your bottom line cash flow. It is important to have a good retention program and to reward good tenants.

Why do people move?

People move for many different reasons and sometimes they just like to move and have no reason at all. They don’t like the neighborhood, they want to move their children to another school, get divorced and need to move, or their family grows and they start looking for a bigger place. Some people decide to buy their own home, some move with their elderly relatives or parents, some move because of their job change. Surprisingly, the most common reason people move is that the landlord ignores them. Not having a good relationship with your tenants can lead to them moving out of your property. Tenant turnover is always costly, requiring unnecessary work and repairs, plus advertising and vacancy expenses that need to be accounted for. To build a strong long-term relationship with your tenants, a retention program is essential.

Classify your tenants

Make a list of all the properties and rank your tenants by ranking A, B, C, D: A is simply the best headache and D is the worst nightmare ever. Most likely, your tenant class matches the property class. What I mean by that is that your best properties located in Type A neighborhoods will likely have the best tenants. Good neighborhoods attract wealthier, more educated, and more responsible people who want a better life for themselves and their families. They are people who are always courteous, respectful, pay on time and do not call for unnecessary reasons. They will also take care of your own home and minor work that needs to be done, such as minor painting, carpet cleaning, or even getting your own appliances. Type B tenants are also a well-paying resident with some flows. The type of tenant should always be classified according to 2 factors: punctuality in rent payments and maintenance of the property. Tardiness is not necessarily a negative factor as long as you can collect rent plus late fees, which turns out to be another source of income. Type C tenants are the ones who have had eviction notices for non-payment, maintenance problems due to increased wear and tear. They are not responsible, their phone number never works, they forget to pay for utilities, and they go from job to job always trying to catch up on their bills. They do not maintain the property well and you may have received citations for litter, violations, and even complaints from neighbors. The type D tenant is the one who wants to LEAVE. These people are the ones who are non-negotiable, often have little or no training, engage in illegal activities, and often live in type D neighborhoods (war zones). In Type D neighborhoods, the best strategy is to rent the home to a Section 8- or government-subsidized tenant, as rent payments are always a problem.

RULE 80/20

As in any business, you probably spend 80% of your time on 20% of your tenants. The goal is to analyze which tenants are causing you the most problems and get rid of them. It is not worth the time to deal with headaches, extensive repairs, late payments, and evictions. Get rid of them, accept a loss at first, and make it work for the long haul. On the other hand, don’t forget about your A and B tenants and take some time to reward them for being great residents.

Implement retention programs

While you may be busy handling the problems of 20% of your tenants, don’t forget about the good ones. In the end, they are the ones who make your life better and headache-free. Remember, when people pay on time, they also have some expectations. When you have 100k in your bank account, you expect your banker to know you by name; The same applies to its residents. Memorize their names and their family makeup. Build report, know who they are and what their interests are. Treat them as they do, make all necessary repairs on time and at all times, follow up on your requests, and return your messages on time.

• Welcome pack for moving. The first impression is what lays the foundation for a long-term relationship. When people move into your property, make sure it is clean and no repairs are needed. Help them transfer your utility bills and follow up to make sure it has been changed to your name. We also normally give small welcome gifts to new residents. We also include a welcome pack that has all the information you need, including our Rent to Own program! The welcome pack is an opportunity to sell more to your clients in the long term.

• Quarterly reviews. It is a good idea to conduct quarterly property inspections and make sure that the properties do not need any work or maintenance. Once people decide to move out, it is VERY difficult to change their minds, so don’t get to a point where it’s too late and allot enough time for your good residents. If you don’t have time to inspect the property or visit its residents, email, text, or make a quick phone call to check things out. People always appreciate it.

• Avoid frequent rent increases. If you have tenants who pay well, leave them in the property and do not increase your rents frequently. Rent increases will eventually become a problem and can cause your residents to move out. It is especially common in times of recession when property values ​​fall and new owners may offer lower rents due to lower mortgage payments. Rent increases are fine if you offer an initial discount on your rent or if you have government-subsidized tenants where a small rent increase is allowed annually. One year we decided to increase all of our rents by $ 25 and lost several tenants. It costs thousands of dollars in unnecessary repairs, advertising costs, and vacancies! It is also your TIME that must be taken into account that you invested to rent the property. In the end, you don’t know what type of tenant you’ll end up with, and it can cost even more money in the long run. To avoid that, you can implement small “inflationary” rent increases and justify them through an increase in your insurance rate, an increase in property taxes, or improvements / updates that have been made to the property.

• Gifts, postcards and thank you letters. Show your appreciation to your residents by sending them birthday and / or Christmas cards. You will be surprised how happy it makes people when they get it. We ALWAYS give gifts to tenants at Christmas and New Years. It’s also a good idea to give them a Home Depot / Lowes gift card or free carpet cleaning. It will improve your property and make your tenants happy. Many times it is not the gift but the attention you give to people, they appreciate it and a gift of $ 25 will translate into a great long-term relationship with your residents.

• Be consistent and do what you promised. Managing rental properties is a business and should be treated as such. It is common sense, but many people do not do what they promise. Makes the landlord look unprofessional and irresponsible. It is your responsibility to be in charge of management if you do not have a management company and it is a full time job! Just do what you promised and don’t promise if you can’t deliver.

• Pay for referrals. You can turn your existing clients into more referrals by sending them an email newsletter with new properties or simply brochures with your properties by regular mail. It is important to send them to your type “A” and “B” tenants. Good people often associate with like-minded people, and chances are high that you will end up getting another good resident. Your tenants won’t want to put your relationship at risk, and they aren’t likely to recommend someone they don’t know personally. As with any business, you want to give your residents incentives for referrals and it can be in the form of a commission, referral fee, or rental discount.

• Renew the lease BEFORE. Get in the habit of submitting the renewal lease at least 2 months before the current lease expires. At this point, residents are not thinking about moving and are more likely to sign another lease. If you do it at the last minute, chances are they are already looking for another place and have found something better or cheaper, or both. Put the dates on your calendar and remember to mail / email the lease and confirm receipt with the tenant. You need to know as soon as possible if your current resident will be moving so you can start advertising the place. It is also a good idea to go over your moving policies if you decide to move.

Politics and procedures.

Being nice doesn’t mean you can avoid policies and procedures. Set your residents’ expectations in advance and explain everything they need to know (must be in writing in their lease) about late payment policy, property maintenance, pet policy, sublet policy, renter’s insurance, moving procedures, security deposit policies, local laws and ordinances. People may not be aware of the things they do wrong, and in the end, that will make you look bad. Set all expectations in advance and be nice later! Find a tenant retention program that works for you and implement it regularly, try various things. Remember that people are all different and what works for one person may not work for another.

Leave a Reply

Your email address will not be published. Required fields are marked *