Tips and Tricks to Get Your Renters to Renew Their Lease
You should always budget for vacancies, but you should also try to keep vacancies low. This is especially the case if you plan to scale your investment portfolio, since you can't afford to lose money.
To minimize tenant turnover, you should regularly keep in touch with tenants, make yourself available to every existing tenant, and make smart investments that add more value than they cost.
Ask About Rental Lease Agreement Renewal Early
Don't wait until a month or two before the lease is set to expire to offer a renewal option. This shouldn't look like repeatedly asking your renter about lease renewal. Instead, your lease renewal process should be consistently touching base with your tenant to make sure they're happy in their place.
You can follow the two-two-two rule by checking in two days before the move in, two weeks after the move in, and then every two months after the move in throughout the duration of their lease. Communication makes tenants feel appreciated and cared for, and happy tenants are more likely to renew their rental agreement.
Make your business and units as modern as possible. That means letting your tenants pay their rent online, communicating via digital means like text or email, and installing smart devices such as thermostats or keyless entry.
These sorts of investments are low in cost but high in value because they increase ease of living significantly. Plus, as these items become more and more common, not having them in your unit will start to make other units look more appealing.
Consider offering self-showings as well. Self-showings make prospective tenants feel like their agency and schedule are respected and that you’re a property owner who keeps up with current trends and technology. In this way, self-showings make for a great first impression that you can build on throughout the entirety of the tenancy. Self-showings also have the bonus of decreasing vacancies because of their convenience.
Follow Resident Feedback
While you're touching base with your tenants, ask them if there are any improvements they'd like to make. This is a great way to highlight your commitment to your tenants and address any issues they may have failed to mention.
Sure, their toilet might consistently leak, but it's no big deal to them, so they say nothing. But a year's worth of drips onto your floor can lead to mold and significant damage. Make yourself available so you catch it soon, and give your tenants just one more reason to accept your lease renewal offer!
If you're competing with new apartments, you may come out on top just because of your lower prices. But with enough amenities, a high price point ceases to be a deterrent. Pools, laundry, storage, rentable meeting/party spaces, etc., all sound pretty appealing when you start adding them up!
To compete, you can improve what you already have. An unused basement can become a storage space. A backyard can get an outdoor patio, and a hallway closet can become the home of a washer/dryer, etc. Those things add up too, but they don't eat up your bank account! And if you don't have any ideas, ask your residents as you should already be doing.
Don't wait until it's time to ask about a lease extension to make improvements. This way your current tenants get to appreciate your work, which could inspire a renewal lease. If you make enough changes, it can justify a rent increase that won't inspire your tenants to leave at the end of the lease term because all the improvements make staying worth it.
A month of free rent if your prospective tenant signs their lease today can be effective advertising, but why only make the offer to a new tenant? Instead, offer it to every current tenant to encourage them to sign a lease renewal agreement.
Be Ahead of the Competition
If you find that other landlords in the area are starting to ask for renewals 60 to 90 days before the sign-by date, start asking 90 to 120 days before the sign-by date. You want to get your tenants thinking about renewing before they start thinking about leaving!
Make Concessions When It's Worth It
If a tenant says that their appliances are out of date or that their counters need replacing, you may be making a significant investment in your unit. But it's worth it if the result is keeping a great tenant. Ensure that when you're surveying your residents, it's clear that you're taking suggestions rather than making promises. Agreeing to fulfill those promises may be part of your lease negotiation.
Study the Competition
Study the rent and lease terms in your area. When setting your rent price, in general, you should be considering revenue and occupancy rates. Sometimes it's worth it to keep your rent lower if you're less likely to experience vacancies. Make sure you're not doing anything that sets you apart from the competition in a bad way. If the security deposit tends to be one month in your area, don't make it two.
And tour your competitor's properties as well. If you notice granite countertops across the board, you're going to need to get them–or something comparable–because your property will otherwise not look as nice.
Care the Extra Mile
Making your tenants feel cared for is about more than just keeping in touch. Send them a holiday card, let them know you're grateful when they've been there for a few years, and remember their kids' and pets' names (write them down if you have to). These gestures show tenant appreciation and can encourage renewals.
If you have a good tenant, then they may know someone else who would be a good tenant. So, incentivize your tenant to refer the person who they think would be a good fit for one of your properties.
Having someone your tenant already has a good relationship with as a roommate or occupying a nearby property will further incentivize your tenants to stay and lower the likelihood of neighbor disagreements.
Your incentives can be a month's rent, gift cards, or cash. Whatever you decide, make sure to publicize your plan once it's in place.
One-Up The Competition's Lease
If you want stable tenants, you may need to make concessions that others aren't willing to make. You can promise not to raise the rental rate if tenants sign for multiple years. You can also allow pets or permit running a business out of a rental property.
Respect Tenant Rights
When tenants feel disrespected or ignored, it provides motivation to look for housing elsewhere.
Landlords have certain responsibilities that they must abide by in order to avoid liability and reduce vacancies.
- Criminal Activity
- Windows and Screens
- Secondhand Smoke
- Bed Bugs
- Slips and Falls
Each of these categories is a source of potential danger to your tenants or community, so you must monitor them closely to reduce the chance of harm. Similarly, you must perform regular maintenance, practice fire prevention, and service/replace your HVAC as needed to reduce the potential of tenant injury or discomfort.
Whether it's a landlord or property manager, not respecting tenant privacy or schedules is a frequently cited reason for not resigning a lease. If the renters’ right to privacy is violated often enough, the occupant could file a code violation or sue, leading to withheld rent, early lease agreement termination, or financial penalties.
Uninhabitable Rental Property
The implied right of habitability is the tenants' right to a space that is livable. Ensuring this right is not violated is one of the things required of property management by law. Similarly, tenant safety is the landlord’s responsibility. At a minimum, landlords must provide:
- secure doors
- safe water
- smoke detectors
If things of this nature are compromised, they need to be fixed ASAP. In general, a landlord that does not reply quickly to complaints is a landlord that does not endear themselves to their tenants.
Consider a Property Management Company
A lease renewal has to be earned, and not every investor has the skills necessary to earn that renewal. A property manager needs to know how to handle everything from repairs to emergencies. But, as you may have noticed, it’s equally important to not be pushy, disrespectful of privacy and schedules, and to have a friendly yet professional disposition. Not every rental property investor can do that if they’re overly concerned about their investment, which leads them to trust their tenants less. A good property manager will earn your tenants’ trust and keep it!
One of the keys to getting your tenants to resign their leases is letting the competition inspire you. Whether you use a property management company or are managing your unit and residents on your own, you will want to ensure your unit is rented to have stable cash flow.
If you're dealing with amenities, provide your own; if you see your competition making particular upgrades, consider making them too; and if you want to retain a tenant, offer incentives others are not. Those are the keys to reducing vacancies.
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