Succeeding in real estate as a property owner requires knowledge on how to maintain tenant retention and reduce tenant turnover. Managing and decreasing tenant turnover is a top priority for many property owners. Anyone can take control and command of a ship during fair- weather, but the true test of fortitude and resilience will be tested when the “storms” come. The same philosophy applies in managing your rental property.
One of the key factors in determining the success of a rental property is the ability to consistently rent out your property to a reliable tenant/resident whilst maintaining a minimum of tenant turnover. My reference to a tenant as a resident isn’t accidental, but rather deliberate. It is possible for a property owner/manager to create a conducive and comfortable situation for a tenant to the point where they feel like your property is their actual home. It is worth noting that a remarkable shift in perspective is created when a tenant sees themselves as a resident rather than a renter.
A fundamental rule in human relations is the ability is take genuine interests in others, when this happens, others will do the same for you. How you treat your tenants will determine how they perceive you and this plays a significant role in encouraging a shift in perspective. More so, It is almost impossible to achieve a state of zero tenant turnover, and this is exactly why it is important for you to understand the essential components of tenant turnover, the factors that influence it and the impact it can have in maximizing your rental property’s performance.
Keeping good tenants and making them happy can decrease the rate of your tenant turnover; most likely, it will also reduce wear and tear on your rental property. Consequently, it will improve income and lower your expenses. Sometimes, it’s impossible to avoid certain situations because a renter could leave your property for a number of reasons, many of which may be unsolvable and beyond your control. There are numerous reasons for which a tenant can decide to move; it could be the receipt of a pink slip, the purchase of a new home, a growing family, or challenges with their finances. These are factors that are beyond your control as a property owner. In contrast, a tenant might also move out because of factors that are within your control; it could be poor management of the rental property, bad communication, untimely responses to requests for repairs, an increment in rents, etc. These issues can be resolved through effective management and proper coordination.
Keeping your turnover rate in check is very important; it will enable you to make as much money as possible while managing your property. A vacant property is an opening for losses, and these losses are going to have a negative bearing on your profit margin and overall bottom line. Your turnover rate is a huge factor in determining how much money you will make on your rental property. When you find a new renter, there is a lot of money that has to be put into the rental property to ensure that the property is in good condition.
Make Improvements On Your Leases
An inevitable occurrence is the fact that some renters will move out of your rental property. Don’t fuss or fret about it, that’s the reality of a rental property business. It wouldn’t be a rental property if you didn’t have renters leaving now and then. With this in mind, a property owner should be prepared to handle any associated or unforeseen move-out costs.
Always ensure that your leases include clear terms that cover areas like security deposits, move-out cleaning fees, damages, and other areas that could cost you money. Tenants are more likely to maintain your property and return it in good shape when they are informed and aware of the fact that these areas are included in the lease agreement. This will save you money in the turnover costs of your leases.
Screen Your Tenants Thoroughly
A scrutinous process should be used in finding the right tenants. It is important to find a tenant who is financially responsible, able to pay their bills and capable of looking after the property. This process entails running a credit check and verifying the tenant's income. Ideally, a tenant whose monthly income is three times the monthly rent would be a good fit. Also, we can decide to call the tenant's employer directly to confirm their employment, length of employment, monthly earnings and attendance record. The first and most important thing that you need to do in order to decrease your apartment turnover rate is to improve your tenant screening process. You can do this by getting help from a reliable tenant screening service that can help you learn how to recognize the best in applicants. Reliable and credible renters are more likely to keep the property in good condition and this will in turn lower turnover and reduce your expenses on repairs.
Build Positive Relationships With Your Tenants
According to Hubspot, 70% of customers who have a positive experience with a brand are likely to spend more with that brand. Also, some of these customers go from fair-weather customers to loyal brand evangelists. The same could be said for rental properties, it will be to the interest of a property owner to build a positive relationship with tenants; this will make them more likely to stay in the property. Also, when tenants trust that you have their best interest at heart, they’ll take good care of your rental property and make it their home.
Another thing you should try to do is to broach the subject of renewals with your tenants. Make an effort to lower administrative rates for those that renew their leases as part of your management process. This singular act can build loyalty and keep tenants staying longer than before.
Be sure to familiarize yourself with California's laws regarding legal renewals.
Final Thoughts
Manage your expectations when it comes to turnover rates. Find out what your average turnover tenant rate is, calculate the cost associated with turnover rates, plan and budget this amount into your overall bottom line. Once you’ve got these things figured out and you’ve ensured that your finances are in line turnovers, vacancies will become less of a liability and more of an opportunity.
