5 Ways to Improve Tenant Retention + Why It's Important

Many landlords assume that, as long as they're able to keep their units rented, they're bringing in the money they need for their investment properties. The reality, however, is that retaining your tenants is often more important than bringing in new ones. In fact, bringing in new tenants can cost much more than you think! 

Do you know how much you're losing on marketing and other strategies that will help you find new tenants each year--and how it may impact your bottom line over time?

Breaking Down the Math on Tenant Retention

Losing a tenant, even if you're quick to move new renters into the unit, can have a number of potential costs. Consider:

• The average unit stays empty for around 1.5 months before a new tenant moves in. 
• You may need to take care of maintenance and cleaning costs on the property.
• Customer acquisition cost isn't just for retail! It may cost money to bring in tenants--and you'll lose that much money each time you have to find a new tenant. 
• You may have to pay direct costs for bringing in a new tenant, including background checks, referral costs, or fees to your leasing agent. 

Depending on the size of the unit, you may find yourself spending as much as $4,000-$5,000 just to bring in a new tenant. While that's not much for a tenant who stays in your property long-term, compared to the cost of rent that you'll bring in over that tenant's lifetime, it can add up substantially--and cut into the profits you're able to make on the property.

How to Improve Tenant Retention

Do you want to improve tenant retention on your properties? While not every tenant will stay forever, many tenants are looking for a place to call home long-term--and the right strategies can encourage them to make your property that long-term residence. 

1. Address problems as quickly as possible.

When a tenant submits a maintenance request, how long does it take you to respond? Tenants who are routinely left with maintenance issues--especially those like heating and cooling, hot water heater needs, or appliance problems, all of which can cause substantial discomfort and inconvenience--will be more likely to move away from a property than those who feel that their needs are met in a timely manner. You can't stop things from breaking, but you can bring in someone to take care of any damage as quickly as possible. Having an experienced property manager take care of this for you can help ensure that you don't have to worry about being on-call all the time, since the property management company will always have someone ready to handle problems with the property.

2. Make it easy for your tenants to contact you, pay their rent, and take care of other tasks related to the property.

Whenever possible, make life easy for your tenants. Requesting maintenance should be as simple as making a phone call or filling out a form online--and tenants should trust that you will take care of that problem in a way that's as convenient for them as possible. Paying rent shouldn't mean having to chase you down, but rather should be as simple as writing a check or logging into an online portal to take care of the bills. The easier you make life for your tenants, the more favorably they'll feel about your property. Working with an experienced property management company can make this process much easier, since they will often have highly effective systems already in place.

3. Show grace.

If you have a tenant who routinely pays her rent on time, only to suddenly fall a couple of weeks behind on payments, show some grace and treat your tenant with as much respect as possible. While you certainly need to collect those rent payments as soon as possible, offer compassion about the reason for that late payment, and work with your tenant to get caught up, rather than simply insisting that you get paid immediately. 

On the other hand, it's important to know the difference between when to show grace and when to see a lack of payment as a warning sign. Sometimes, tenants will say they're going to catch up on rent for months before the landlord realizes that they have no intent to catch up on their rent, and that he will have to kick them out anyway. Watch the patterns of tenant behavior to get a better idea of when you should show grace and when you need to act quickly to protect your rental property investment.

4. Pay attention to what your tenants have to say.

If you're concerned that you aren't retaining tenants as well as you might have hoped, consider going to the source to find out why. Is there something about your property that is sending your tenants away? Ask tenants in exit interviews why they've chosen to move on. Get a feel for what they want in their next property or what they're moving on to. Don't forget about your current tenants, either! Listen carefully to any tenant complaints or problems. Send out a survey to learn more about your tenants' needs. The more you know about their needs and preferences, the better you can answer them.

5. Create a respectful community.

Life in multi-family dwellings can be difficult when just one neighbor decides not to abide by the rules of common courtesy. Late-night parties, loud music, and slamming doors can all prove incredibly disruptive for other residents--and those residents may quickly move away in droves if those challenges aren't dealt with promptly. Create a respectful community where your tenants can trust that their complaints will be heard and dealt with quickly. Uphold quiet hours. Deal promptly with renters who show disrespect to others in the area. Often, those simple steps can help protect your existing renters by making them feel more comfortable on the property.

Keeping your existing tenants is an important way to increase your profits and save on your investment property expenses. If you need help with these strategies so you can spend less time searching for tenants and more time enjoying the benefits of owning that property, C21 is here for you. Contact us today.