Tip #68

Offer incentives to current tenants so they stay

Written on March 19, 2018 by , updated on June 18, 2018

communicationTenants who pay on time and keep your rental in good condition are highly valuable to you as a landlord. Every time a tenant moves out, you need to clean, repaint, or completely revamp the unit. And then there’s the time it takes you to find a new tenant to fill the vacancy.

Cost considerations

Costs add up quickly during those tenant-turnover months. It’s hard to pinpoint an exact expense per vacancy per month, since the amount varies based on how much work needs to be done in the unit and how long it lies vacant. But here’s how to estimate the expense:

  • Figure the rental income lost on that unit for the month.
  • Add in the average expenditure to prepare a unit for the next tenant. Base this on previous vacancies in the building or on your past experience with this home.
  • Add in your mortgage if you have one.

Incentive options

Encourage good tenants to renew their leases by offering incentives.

  1. Monetary rewards, especially rent reductions, can motivate tenants to stay. Offer a reduction for renewing for a year, or a greater reduction for a two-year renewal. You may lose several hundred dollars for the year, but this loss is probably less than even one month of a vacancy. Be sure property-tax increases are accounted for before offering a rent reduction in order to keep your expenditures to a minimum.
  2. A unit upgrade is also a great motivator. If a tenant is on the fence about renewal, ask to do a walkthrough of the unit to see what can be done to improve the place. A new showerhead or dishwasher could be the key to keeping that tenant.
  3. Add enhanced security in the form of security locks or motion-sensing lights near the garage or doors. These inexpensive systems add peace of mind and could potentially encourage a tenant to stay, versus having to deal with a move elsewhere 
  4. Giving a gift card, personalized to each tenant, is a nice touch and one that might get a tenant on the fence to stay. For instance, a tenant with health or mobility issues might appreciate free housecleaning services, and a pet owner may enjoy a gift card for a pet shop or groomer.

Related: Should Landlords (or Tenants) Install an Alarm System?

Service equals success

Great customer service is the best way to keep tenants year after year. This requires quickly replying to tenants’ concerns and showing care toward both tenant and property, over time. Tenants notice simple gestures, such as new potted plants on the porch or a new welcome mat for the front door.

When it comes to taking care of the tenants, if you do your job well, your tenants will ultimately take care of you. Just as landlords seek good tenants, renters want a good landlord or property manager. Tenant incentives and good customer service are good for your bottom line.

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2 CommentsLeave a Comment

  • dena stern

    would like to know what the percentage that can be withheld by tenant due to mitigated damages

  • Cosvitec

    If you have a service such as water that is lienable to the property owner, instead of the bill going directly to the tenant (and them ignoring and you not finding out unless you are monitoring the bills): a) Have the bill go to you and pay the bill then remit to the tenant for payment within X days. Then the tenant knows you know when they have paid. If they don”t pay, they can be evicted if you put that as a condition into your lease. b) If a bill comes quarterly, then have the tenant pay a set amount each month toward the bill. (Example: $150 average quarterly bill; have the tenant pay $50 each month). Then when the quarter comes up, have the tenant “settle up. c) Some utility providers include fixed amounts and variable amounts in their bills. You could include the fixed amounts as part of the rent, and just bill the tenants for the variable amounts. There are many ways to structure such things to get a happy relationship with the tenant.

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