Five Effective Ways to Retain Your Tenants
It’s always sad to see good tenants vacating your property, when they are not satisfied or happy with their experience. Whenever a tenant vacates, in addition to the vacancy loss, you also need to refund the security deposit, execute move-out maintenance work, advertise the property and bear other costs.
Let’s assume the monthly rent is $1,000.
Vacancy loss(if vacant for a year) = $12,000
Move-out maintenance work = $3,000 (approx. based on the amount of work)
Advertisement cost = $600 yearly (assuming $50 monthly fee)
On an average, your expenses would shoot up beyond $15,600 annually if your tenants vacate, hurting your yield and ROI from the property.
Just because a tenant has signed a lease, it does not mean that he or she will stay for long. Whether you are an established property manager with a whole portfolio of clients and properties, or if you are starting out in the real estate industry, ‘tenant retention’ is a key factor in improving your returns.
Keeping your tenants for a long period is just as challenging and important as finding them. Why?
Well, first it costs you about a thousand dollars or more every time your tenants move out for advertising, renovation and the loss of rent, while the property is vacant. Every minute that your unit sits empty, it’s costing you money! In addition, you need to bear the cost and effort of moving in new tenants such as agent commission, lease signing & processing fee etc.
Here are 5 quick tips on getting your ideal tenants to stay for the long term!
1) Provide flexible rent payment options
Once you have succeeded in getting the property leased, the next major objective is to receive monthly rent and other payments. Analyzing and considering the convenience, age, and preference of target tenants is an important factor.
- Requesting tenants to pay rent online via an autopay or auto-deduct system is the best way to collect rent. It eliminates the possibility of tenant forgetting to pay rent. One-quarter of the U.S. residential sector is already represented by the Millennial generation and majority of them have never used a paper check in their entire life. Online renter’s portal will help them to make rent payments online with their credit or debit card or an electronic check transaction (ACH) securely. Rent payment at stores via PayNearMe is another trending option to pay rent cash, at their nearby local 7-Eleven or ACE Cash Express stores any hour of the day or night.
- Online payments might be an effective option, but senior or technology averse tenants may not find this convenient. They will most preferably choose traditional methods to pay cash directly to the owner or pay at the bank. They may also prefer stacking the physical receipts for tracking payment history. In such case, it’s always good to send them a reminder by post well-ahead of rent payment due date. They might not check their email inbox, but they surely will check their mailbox. In case you turn up at the property and find out that they have not arranged for cash, an alternate option is to ask their debit/credit card to swipe the same on your mobile device. Swipe Card Reader like udynamo or Authorize.Net mPOS also used by many.
2) Quick turnaround time for maintenance
Maintenance happens all the time, even if the property is vacant. Fixing the wear and tear on a periodic basis is important in addition to snow clearing and pool cleaning.
But maintenance requests from leased properties are a super high priority. Swift action to multiple maintenance requests from various properties can be effectively handled via maintenance management software. In addition to getting a bird’s-eye view of everything that’s going on with every maintenance work, effective response depends on various activities such as attend a maintenance request call, figure out the exact category of work required, finding out the most suitable vendor and availability, getting prompt response from vendors, updating the tenant on progress, flexibility for vendors to capture and share work progress and raise online invoices and get paid for the work.
The tips below will help you to expedite, manage and monitor maintenance works with increased tenant satisfaction.
- Provide and make tenants aware of various options to raise maintenance request. Raising requests from anywhere, at any point in time makes it convenient for tenants. Online tenant portals and a phone call can source in most of the requests. In case the tenant does not have internet or does not want to spend time on hold, toll-free number and IVR (Interactive Voice Response) would be the best options to reach out to the maintenance support staff/property managers.
- Communication is the key. Tenants should be able to give a clear idea of the maintenance required and maintenance support staff should be able to capture the right details & communicate the same to the vendors.
- Scheduling is another key aspect where most of the time is often spent in finding out the apt vendors with matching skill, availability and if they are willing to take up the work. In most cases, vendor reassignment iterations consume time.
- A better solution would be to have an auto-vendor assignment and reassignment system that could automatically search from the list of vendors who are available on the field, with the matching skillset, closest to the property, rating and assign work to them on the fly.
- Mobile apps go a long way to make daily activity for vendor much easier. They get notified of the work assigned to them, they get the information on maintenance required, notify tenants that they are on the way to their home, take photos of work before and after completion, clock the time duration of work, raise change requests and materials required, raise invoices and get feedback or rating.
3) Appreciating consistent on-time rent payments
Just like we encourage kids each time they do something good by rewarding them, tenants appreciate it when you reward their promptness. An appreciation mailer or even a small reward like the ones listed below will positively improve your relationship with the tenant.
- Reward points or talk time balance for maybe 3 consecutive on-time payments that they could redeem as cash or as vouchers which can be used at stores nearby.
- Small discount on rent, for the month in which the tenant’s birthday falls along with a greeting card as well.
- Mail or notification or organize a small tea party for tenants who have their lease anniversary with 12 consistent on-time payments.
- Reduction in the total rent amount when paid 6 months in advance.
- Referral programs or promotional offers will prompt tenants to take up a portion of your job to find the prospective tenants for your vacant properties.
4) Keep tenants informed
Avoid last minute surprises for tenants. We often tend to forget what the tenant might be thinking all the while we are struggling to keep up with the rent collection, lease renewals, move-in/move-out, maintenance activities etc.
Keeping tenants aware of terms and policies, do’s and don’ts, right steps to proceed with lease renewal, moveout, maintenance progress, rewards etc. is equally important.
Provide status of activities via email, SMS and online portal notifications in addition to post and IVR if possible, which would enable tenants to be on top of maintenance status, payments, lease details and other important items.
- Maintenance – Keep the tenant up to date on the exact maintenance status and the next expected step or time for work completion. Most importantly, keep tenants informed of the vendor visit.
- Payments – Payment history, the status of payment made and checking the balance due are critical information that needs to be notified and reminded as well.
- Educate tenants who are unaware of the benefits of paying rent on time like increased tenancy credit score, rewards, various rent payment options etc.
Consequences of late payment should be communicated clearly well in advance when it comes to late fees and eviction.
5) Feedback from tenants who are moving out
Capturing and trying to bring into effect the feedbacks from tenants who are moving out helps a lot. Good tenants might move out due to small reasons, which could have been resolved easily like providing a child-friendly environment or mobility facilities for the disabled.
When it comes to property managers, building good relationships with tenants is the key factor that requires investment of genuine time, effort and communication techniques.
Start practicing a few of the tips above and see how it creates a positive impact on your business. Looking for more real estate technology articles? The following articles might be of interest to you