Tenants 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.
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.
Encourage good tenants to renew their leases by offering incentives.
- 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.
- 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.
- 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.
- 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.
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.