Every landlord dreams of having high-quality tenants occupying their properties. However, once you find those ideal tenants, how do you ensure they stay long-term, reducing vacancies and turnover rates? Keep reading on if you’re ready to maximize your real-estate business and get your tenants to extend or renew their leases!
Why is Tenant Retention Rate so Important?
Being a landlord is a long game of gains and losses. That’s precisely why tenant retention is at the top of the list of importance. A landlord’s retention rate measures the number of tenants who stay within your properties for multiple rental periods. If your managed properties are long-term spaces, this number is significant.
Ultimately, this figure gives a landlord a greater idea of which tenants are sticking around and why. If ideal tenants choose not to stay or renew their lease, this might show a landlord where improvements need to be made.
- Let’s do some math! Start by dividing the number of tenants that have moved out over 12 months by the total number of tenants who’ve been on the property in those 12 months. Then, multiply by 100 to figure out your turnover rate.
This figure might not even require all that much math if you’re not a landlord of several multi-plex properties, but the concept still stands. It’s always essential to understand how long tenants stay and why.
Can You Maximize Your ROI with Fewer Turnovers?
It’s no secret that a tenant staying in your rental property for multiple rental periods correlates with a return on investment. Consistent income means consistently being able to cover annual expenses. Vacancies mean paying out of pocket for those expenses. There are straightforward ways to keep turnovers at a minimum and increase your overall ROI. Let’s take a look.
1. Screen Tenants Thoroughly Through Property Management
Finding quality tenants is a challenge, and that’s why correctly screening for the best tenants is at the top of our tips list. If you’re not currently screening tenants, finding tenants you’d like to retain is likely low. We can always hope that the correct tenants will find us, but that’s not common. By screening tenants, you can ensure that the people renting from you are those you’d like to have for multiple rental periods, meaning less stress for you and your wallet. Remember that when screening, you should always:
- Verify income
- Run a background check
- Personally speak with tenant’s references
2. Keep Rental Rates Consistent
We understand that investing in property isn’t a minor decision. It’s time-consuming, costly, and isn’t always a “sure bet.” And although the primary goal of owning and renting property is to increase one’s income, it is crucial to recognize the difference between rental rates consistent with market pricing and rates that could scare the right tenants away.
Being overly aggressive with rental rate increases can steer tenants out the door, even if they want to renew a lease. If you’re thinking about increasing a rate, do your market research. As yourself, is this rate justified? Is it too far below or far above market rates in the area? The safest bet is to increase the rate slowly in coordination with market trends. Gauging rates will be entirely unappealing to a renter who’s done their market research.
3. Maintenance Should Always be a Priority
Providing maintenance for any property is inevitable. The key is being proactive in routine maintenance tasks, which should help you avoid emergency or quick turnaround repairs in the future. But apart from keeping your property looking appealing, providing regular maintenance can be an attractive draw to current and future tenants.
By being prompt with maintenance and resolving property issues in a timely manner, you’re actively earning a tenant’s trust. It shows that you care about the property and the tenant’s happiness. Remember to keep tenants informed of any updates or maintenance checks. Doing so helps to build a stronger tenant-landlord relationship.
Property Management Solutions
At Rhino Property Management, we know that the job of a landlord can be daunting. As much as you may love investing in properties, your goal might not be to manage them all independently. That’s where the Rhino team has you covered. From tenant screening to property maintenance, we’re the full-service management company that you deserve to have on your side. Want to retain tenants and get a higher return on investment? Contact us today to see how it’s possible.