How to turn tenants into long term tenants
To get the greatest return on the Investment you made in finding and screening great tenants, it makes good sense to keep them in your house as long as you can. Here are 6 tips to help avoid your tenants giving notice to move out.
Blogger: Michael Gilbert, co-founder and director, Rent My Estate
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Tenants eventually move out, that's just a fact of the rental business. For whatever reason, sooner or later they are going to move on, and the property owner has to go through the process of finding tenants all over again.
There are properties better suited for short term tenancy, but we are not running hotels. Long term tenants are the best value for the property owner (and for the tenants, as well). So, how do you keep your tenants from moving?
Some people simply have to move on, whether for work, family concerns, or an uncontrollable gypsy spirit. Many move on because they find their present abode unwelcoming. This second group is the one owners need to focus on to encourage their nesting instinct.
1. Set Your Rental Price Just Below Market Value
This is going to sound a little crazy to some owners, but it is worth thinking through. This is not a call to seriously undercut the market, that just reduces profit for everyone.
It is worth considering listing just a little low, say 2-3% below what places similar to yours are asking. Not only does this make staying in your house more attractive, it attracts a higher quality of tenant. Generally, these are the sort of tenants looking for a home and not just a place to stay.
As a side note; I have found that if I set the rent just a sprinkle under market value I attract high quality tenants to my inspections. If I advertise higher than market value, I get applications from desperate and unreliable tenants who are unable to get approved elsewhere.
2. Make Your Rent Adjustments Reasonable and Consistent
The cost of running a property always increases, and tenants generally understand that. What they don't always understand are sudden, big jumps in the rent.
A small annual increase in rent, around 2-3%, is a fair rule of thumb. If the tenants complain, you could offer a reduced rent increase but with a longer lease term (Win -Win). You won't be losing income since you know the place is never vacant.
3. A Well Maintained Property Keeps Tenants Happy
Keeping up on maintenance issues pays off in many ways. It maintains the property value, it inspires the tenants to take better care of their home, and it reduces the chances of major work needing to be done. Most of all, tenants feel that if you are taking care of the property you are also taking care of them, so they will want to stick around.
4. Jump on Repair Issues
If you notice something during a walk through which needs to be attended to, or especially if the tenant calls you with an issue, take care of it A.S.A.P. This is another way to show you care about the property and your tenants.
5. Give Tenant Requests Due Consideration
Sometimes a tenant will ask to make some changes to the property, like painting a wall or putting in a small vegetable garden. If they want to invest their time into those sorts of changes, perhaps they are making a long term commitment to staying? Then it is worth the extra couple hours of work in two or three years to put things back.
The thought of someone tearing up your lawn may come as a shock, but if they plant veggies, they are not likely to move until after harvest. Besides, you will probably be offered more fresh tomatoes and cucumbers than you can eat!
Give some thought to allowing pets as well. Most property owners are against pets, but once you know your tenants for a while you can judge whether they will be responsible pet owners. Since it is hard to find a nice place which allows pets, good tenants will want to stay put.
6. Surprise Them!
One of the best ways to create long term tenants is to make sure your relationship is more than collecting the rent and doing the occasional walk through. A good way to do this is to send them a little present for Christmas or other occasion. Just something simple like movie vouchers. This tells them that you care about them as more than a source of income.
A good way to keep your tenants happy is to remember the Golden Rule. Consider what it would take to make you happy if you were renting the property. Following these tips may not guarantee that your tenants will remain in the property for years and years, but at least they will have no reason to leave if they don't have to.
I’d be interested to hear your own thoughts on keeping good tenants in your property, share your tips below.
About Michael Gilbert
Michael is the Co-Founder and Director of Rent My Estate, one of Australia’s leading online property management services. With Rent My Estate, property owners can advertise, find tenants and manage their properties without having to use a conventional real estate agent.
Since he started as a real estate agent nine years ago, Michael has been examining the property management process in Australia and finding ways to improve it. His goal is to make property management a simple, stream-lined process with Rent My Estate.
As a nationally licensed real estate agent, Michael relishes the task of helping his clients with all kinds of real estate issues. He blogs regularly at Rent My Estate to share property management tips and strategies which are important but sometimes overlooked by owners.
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