How to Minimize Tenant Turnover
Finding tenants and filling vacancies can be a stressful and time-consuming process, from creating your listing to organizing viewings and collecting applications. However, it’s also one of the most important parts of being a landlord. Every day the property sits empty is lost revenue.
As such, landlords need efficient processes to find and secure great tenants in order to minimize expensive vacancies. In this article, we take a look at what you need to know in order to reduce tenant turnover and efficiently find new tenants.
What is an Apartment Turnover?
Tenant or apartment turnover occurs when your current tenant leaves, and your property remains vacant until you find new tenants. During this period a property manager earns zero rental income, however, they still have to pay for the costs attached to the property.
Renters often leave because of job relocation, family related issues, or a change in marital status, making vacancy inevitable. That’s why we suggest focusing on factors which property managers can overcome by building strong relationships with their tenants.
It is very time-consuming to build a good relationship with your tenants while pushing hard to grow your portfolio and manage other gazillion tasks. Many property managers fail at doing this.
Whether you are a property manager or a landlord, nobody likes going through the cumbersome tenant move-out process every summer.
Here is a list of potential factors that might make your renters switch:
Nobody likes living in a place that’s breaking down all the time. The longer it takes to resolve maintenance issues, the more frustrated your tenants will get. Renters who have the option to move out will never tolerate pest infestation, leaky roofs, smelly surroundings, or clogged toilets.
And oh, they will also leave you with negative feedback after moving out, ruining your brand reputation.
Your job as a property manager doesn’t end once your apartment or house is rented. You need to create an open mode of communication between yourself and renters. Being always available for your renters solves minor issues such as tenant clashes, noisy neighbors, or any maintenance problems.
Poor communication prevents these issues from reaching you, and tenants prefer moving out instead of voicing them all the time. Whereas good communication is a sign of a healthy relationship and lets you learn about issues before they become a problem.
Renters often move out because they are unable to afford an increase in rent. Any unplanned expense, such as a mishap, loss of a job, an accident, or an expensive medical condition, might trigger them to move out.
For any reason, rent increase often forces the tenants to compromise on food bills, transportation bills, or home heating charges. And they choose to move to a smaller unit.
Rental vacancy rates in an insecure, noisy, or abusive area are often high because home is a place of peace and comfort. Imagine coming back from a hard day’s work and dealing with loud neighbors or construction work nearby.
You won't like that, will you?
Healthy, cooperative, and peaceful surroundings attract more renters. So, if you are screening some suitable tenants for an unsuitable neighborhood, maybe it’s time to improvise your screening criteria.
Change in Relationship Status
Many tenants will relocate after a change in their relationship status. People who are going through a breakup, separation, or divorce will start looking for a smaller place. Or vice-versa in the case of growing families.
Job relocation is another reason why properties go vacant. With 31.2% of the renter population being millennials, there is always a possibility of them moving around a lot. Many renters relocate for a convenient commute to work and move to areas closer to work due to high transportation costs. Not everyone uses Uber all the time!
How Can you Reduce Tenant Turnover?
take tenant screening seriously – screen well, check references and accept those who are a good fit your building and unit. It’s sort of like a marriage and you can get a sense when you meet them whether they like your house, condo or apartment.
avoid big rent increases – a big increase could be used justify leaving when they didn’t really feel that strongly about it before. Ensure you are ready with new tenants in the pipeline.
respond to tenants questions and issues promptly – get back to tenants using SMS, email, or phone. Those long waits, or being unable to reach you could shatter trust and confidence.
ensure the unit and building are in good condition and make regular improvements – don’t let the property go as they’ll feel unappreciated, unwelcome and feel you don’t even care about your property. Consider upgrading or doing a renovation to increase potential rent prices and their comfort.
invest in properties in nice neighborhoods with high or rising employment – tenants love these communities and if employed nearby, they won’t want to leave
invest in properties in neighborhoods with good transit and key intersections nearby – some buildings and communities have very strong demand for units, and vacancy is much more rare
give incentives for tenants to sign a 2-year agreement – They won’t sign long term unless they like your value proposition (property and terms).
modernize with property management software – all in one software takes the load off and makes it easier to stay on top of things so you have more time to concentrate on your tenants.
ensure good relations and communication with tenants – ask for a visit to say Hello and bring them a bottle of wine — appreciation makes them feel good about where they are at this point in their lives (contentment).
provide incentives to stay and pay on time – give them a gift or small discount if tenants in good standing decide to stay another year or two.
be open and honest about mechanical issues and delays – when furnaces, washers, dryers, A/C units, or windows are not working, give them certainty about repairs so they can relax.
keep in touch with tenants — enjoy talking with them and look for signs they’re unhappy or fed up and ask if there is anything you can help with
The issue of lowering tenant turnover is within your management skillset. You know the factors and can ensure you erase the negatives and build on the positives.
Ensure you study your tenant/building issues so you’re not kidding yourself.
If you can save 1 month’s rent, advertising costs, tenant screening costs, and the price of cosmetic repairs, then reducing tenant turnover actually has a valuable ROI. Look at it as preserving your revenue, optimizing cash flow, and maximizing your property portfolio performance.