Better Tenant Retention and Lower Churn
As the first half of 2023 closes, we may be entering a period of economic slowdown which could stall wages and reduce employment levels.
Some of your tenants will likely get caught in this temporary downturn. Some will end their lease due to unemployment while others will wave goodbye looking forward to their new location and big rent price drop.
Stats indicate a coming slowdown and it could stretch out for the next 12 months. Demand for rentals is still strong, however rent prices will be a sore spot for many renters and they’ll be on the hunt for more affordable accommodations.
That means ended leases, increased vacancies, turnover costs, advertising and renter screening, and more of your valuable time taken.
Keep Your Good Tenants!
This brings us to the topic of tenant retention which provides an opportunity to:
- extend leases to 24 months with a discount or incentive
- keep the unit leased at a high rate as rent prices fall and vacancies rise
- ensure you keep your best tenants
- avoid the risk of new tenants and the threat of bad tenants
- avoid being crunched by lower maintenance budgets and shrinking staff
Vacancies Produce Some of the Worst Losses
Overall, 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 worthwhile to build a plan and strategy and spend some money on the effort.
On the other side, is mounting concerns about non-payment of rent and evictions, costly experiences that encourage landlords to be more 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 are 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 contented 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 of 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 continue rising. Some will be absolutely desperate to get out of their leases and will exercise any clauses in the lease contract including subletting, roommates, and transfer of leases.
Surprisingly, what is secondary right 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 deepen in the second half.
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.
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.
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Further reading: NMHC Conference 2023 | 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 | Better Tenant Onboarding | How to Retain Good Tenants | Toronto Property Management | Best Landlord Software | California Housing Market | 7 Features of Good Software