Better Tenant Retention and Lower Churn
As house and apartment prices remain lofty, while the US economy stumbles, rent moratoriums end, property landlords and apartment managers will suffer through higher vacancy rates.
If you’re used to 98% to 99% occupancy rates, you’re likely in for a surprise in the next few years.
Fundamentally, vacancies are impossible to avoid given renters tend to be a transient population. Add on high, rising rent prices, sagging economy, government spending controls, stagnant wages, rising taxes, troubled social programs, crime, job changes, and normal life transitions, and it can be challenging to hang onto good tenants.
Good, paying, long term tenants are the key to successful revenues, cash flow, and business stability. It’s hard to plan and invest further with high tenant churn.
If you’re one who takes great renters for granted and your rentals are higher priced, you might be in for more substantial interruptions in leasing, cash flow, and a growth in costs.
Vacancies Produce Some of the Worst Losses
One vacancy typically costs 1 to 2 months rent equivalent. It’s one of the costs that pains you and your property manager most, so it’s worth it to build a plan and strategy and spend some money on the effort.
Here’s 5 good reasons to build your tenant retention strategy:
- lost rent, weaker cash flow
- added advertising costs and time spent in acquiring tenants
- rising brokerage/leasing agent fees
- reduced property maintenance budgets coming
On the other side, is mounting concerns about non payment of rent and evictions, costly experiences that encourage landlords to be intelligent about their tenant acquisition channels and vacancy advertising.
From direct responsive communications to lease incentives to new tenant services and great maintenance programs, there’s plenty of ways to keep tenants leased.
In 83% of cases where renters leave, it’s caused by a triggering event. It’s important to be up-to-date on your tenants’ perceptions and concerns. Know where their priorities lie and respond to them with top-notch customer service, since your financial situation depends on their satisfaction. — Turnkey Invest Properties.
It is about a great tenant experience, and a whole lot more.
Fortunately, with some tenant management techniques and a helpful property management technology, you have powerful tools for keeping todays renters content and under lease.
Your new tenant prospects will be hesitant about recommitting to current rent prices, or higher rent prices, and signing long term leases. More tenants are reportedly seeking shorter-term leases and lower rent prices. They may be expecting apartment rents to drop.
The point is that tenants expect more, are reevaluating their work and personal lives, and some just want change even if it’s frivolous. All that doubt needs to be dealt with. You must communicate that they are already in their happy place, and it’s better to stay put in their current lease.
Good communications will help them avoid making bad decisions.
Discomfort is the Real Cause of Vacancies
Rent prices will be the key driver of churn in 2023/2024. That’s combined with rising unemployment which will happen as the Fed rates rise. Some will be absolutely desperate to get out of their leases and will exercise any clauses you have in the lease contract including subletting, roommates, and transfer of leases.
Surprisingly, what is secondary now, is comfort.
Tenants move not always because of financial pressure, but from a mounting feeling of frustration, pessimism, worry, hopelessness, disappointment, etc. That discomfort may stem from a rental unit with few amenities, lower safety, and a feeling of stagnation due perhaps to the weakening economy. That will only worsen.
Some tenants will be changing jobs and moving to new cities out of necessity.
By simply changing how you and your staff listen to and interact with your tenants, coupled with minor property improvements, you can greatly reduce the likelihood that they’ll leave. — Turnkey Invest Properties.
You could keep them leased by helping to manage these feelings of powerlessness rather than passively watch them get fed up and leave. A move might actually not be in their own best interest and could leave them much worse off.
Note: Using your property management software, you can maintain more active and supportive communications with them. Tenants believe the picture of value and comfort you share with them.
And by giving them an opportunity to express their feelings and circumstances via your communications channels, you might be forewarned of those who may give notice. This is where your property management solution can be especially helpful.
Some managers want “predictive management tools” and they may already have them in their management system.
How to Retain your Rental Tenants?
Here’s 7 vital actions to take to keep them leased as their lease term expires this year.
- remind tenants of how convenient, rare and safe your rentals are
- improve tenant communications to build a stronger connection
- fix anything broken or not optimal in the unit/building
- be respectful when speaking to them about late rent and the need to stay current
- reducing rent a little
- ensure they’re aware of all grants/loans available to them (personal or business)
- incentivize lease renewals — add a few perks for resigning the lease such as new rental appliances and amenities
A tenant retention plan is helpful in structuring the assets you’ll use. A tenant retention strategy helps bring it together in a way that will impact your audience. You must begin your strategy development by taking your tenant’s point of view and considering the full value of what you offer them.
10 Additional Things You Can do To Keep Tenants Leased
- respond quickly to maintenance and repair requests and follow up on tickets for total satisfaction
- ask tenants how they’re doing and if all is well in their unit, with their neighbors or the building and discover what is causing them discomfort
- review the things that make tenants happy and implement at least one of them
- put a focus on grounds or building security, and communicate the extra vigilance for crime to tenants
- add an amenity whether digital amenity or an in home feature
- take a visit to your building/multi-family residential building and make casual conversation to get up to date on what’s happening there
- remind all tenants (broadcast email or message on property management software) to be considerate to neighbors, watch out for safety of children and elderly, and keep social distance to avoid health issues
- conduct a survey and ask what improvements tenants would like
- be polite, courteous and professional — put yourself in a positive, caring frame of mind before you communicate anything to tenants, because the tone of your voice and conversation is what they hear
- offer gifts for on time payments during the pandemic (e.g. $20 food gift card)
If you have emotional intelligence as some call it, you’re apt to see what the real issues are with your tenants. That’s a big advantage to help reduce churn and the tension that causes tenants to end their leases.
Collect insights and feedback through your new channels, i.e., your property management software, and go with your hunches about where you might lose tenants.
This tenant retention effort is one of the processes that can really elevate your rental property management business. You’re managing people, and people like to be happy.
Find more property management blog posts for deeper insights, current news, technology updates, rental housing trends, management tactics and more.
ManageCasa property management software is built in the USA for landlords in New York, Chicago, Boston, Philadelphia, New Jersey, Charlotte, Cleveland, Dallas, Houston, Phoenix, Las Vegas, Seattle, Los Angeles, Miami, Tampa, Orlando, St Louis, Indianapolis, Denver, and cities across the US, Canada, Australia, UK and Germany.
Further reading: How to Review and Select Software | How to a Attract Good Tenant | Source of Good Tenants | Why do Tenants Leave? | How to Get Better Tenants | How to Write Better Rental Ads | Screening Tenants Better using Social Media | Better Tenant Onboarding | How to Retain Good Tenants | Reduce Tenant Churn | How to Get them to Renew their Leases | Best Landlord Software | California Housing Market | 7 Features of Good Software