If you’re a rental investor, you might be struggling with a very common problem: tenant turnover… and its impact on occupancy.
Tenant turnover is when your tenant rents your property, stays in it for a while, then leaves. They’re supposed to give you plenty of notice but maybe they leave the property in rough shape or maybe they don’t give enough notice or maybe there aren’t a lot of tenants. So, for whatever reason, your rental property goes unoccupied for a while… and you are stuck paying the carrying costs while you look for another tenant.
It’s a problem for rental investors… and it can get very expensive! So in this blog post I’m sharing some ideas to help you minimize this problem. Your goal should be to reduce tenant turnover and increase occupancy – ideally by keeping your existing clients in your rental properties. Here’s how…
- Perform your due diligence on your tenants. Strive to only rent to tenants who have stable, long-term jobs and who don’t move around a lot.
- Use a lease. Although not foolproof, leases help to set the tone for your landlord/tenant relationship and they spell out the duration of the rental period.
- Maintain your property. Tenants want to live in a property that is well-maintained. So reinvest some of that rental income on repairs and upgrades.
- Make their stay special. Give your tenants a small fruit basket when they move in or a token gift during the Christmas season. You don’t have to be extravagant but a little touch will go a long way.
- Give incentives for lease renewal. If a tenant renews a lease, give them an incentive. One incentive I like is a twelfth month free on a year-long lease. While this does reduce your income by 1 rental payment, consider the cost of repairs, advertising for a new tenant, doing background checks, and any unoccupied carrying costs you might have to pay.
Not all of these ideas will be right for everyone but I’ve listed a few here that you can pick-and-choose from to help you.
A lot investors take a harder line and tend to see themselves as benevolent landlords who are generously allowing a tenant to stay in their property. But I take a different approach: I believe that tenants are clients. Just like many other businesses, they have a choice – to “buy” (rent) from us or from some other business. Therefore, we need to our tenants with the respect that we’d treat any client in any business we owned.
As an investor of rental properties, one of the biggest “expenses” is the loss of income from periods when our properties are unoccupied. It’s worth spending a bit of time, money, and effort to work with your tenants to keep them in your properties longer to help reduce those non-revenue generating periods.
I’d love to hear from you… what do YOU do to keep tenants in YOUR properties?