retain good tenants

All residents of your properties should be treated as your business partners, as they are responsible for income, expenses, and your final cash flow. It is important to have a good retention program and reward good tenants.

Why do people move?

People move for many different reasons and sometimes they just like to move and have no reason at all. They don’t like the neighborhood, they want to move their children to another school, they get divorced and need to move, or their family grows and they start looking for a bigger place. Some people decide to buy their own house, some move with their relatives or elderly parents, some move due to their job change. Surprisingly, the most common reason people move is because the landlord ignores them. Not having a good relationship with your tenants can cause them to move out of your property. Tenant turnover is always costly, requiring unnecessary repairs and work, as well as factoring in vacancy and advertising expenses. To build a strong long-term relationship with your tenants, a retention program is essential.

Classify your tenants

Make a list of all the properties and rank your tenants from A, B, C, D: A is simply the best without a headache and D is the worst nightmare ever. The tenant class will most likely match the property class. What I mean by that is that your best properties located in A-type neighborhoods will probably have the best tenants. Good neighborhoods attract wealthier, educated, and responsible people who want a better life for themselves and their families. These are people who are always polite, respectful, pay on time, and don’t call for unnecessary reasons. They will also take care of their own house and any minor work that needs to be done, such as minor painting, carpet cleaning, or even getting their own appliances. Type B tenants are also good residents who pay with some flows. The type of tenant should always be classified by 2 factors: the timeliness of rent payments and the maintenance of the property. Being late isn’t necessarily a bad factor, as long as you can collect rent plus late fees, which turns out to be another source of income. Type C tenants are the ones who have had eviction notices for non-payment, major wear and tear maintenance issues. They are not responsible, their phone number never works, they forget to pay the utilities and they go from job to job always trying to catch up on their bills. They don’t maintain the property well and you may have received litter citations, violations and even complaints from neighbors. The type D tenant is the one you want OUT. These people are the ones who are non-negotiable, often have little or no education, engage in illegal activities, and often live in type D neighborhoods (war zones). In D-type neighborhoods, the best strategy is to rent the house to a Section 8 or government-subsidized tenant, since rent payments always become an issue.

80/20 RULES

As in any business, you probably spend 80% of your time with 20% of your tenants. The goal is to analyze which tenants cause you the most problems and get rid of them. It’s not worth the time to deal with headaches, extensive repairs, late payments, and evictions. Get rid of them, take a loss early and make it work for the long haul. On the other hand, don’t forget about your type A and B tenants and take some time to reward them for being great residents.

Implement retention programs

While you may be busy handling the problems of 20% of your tenants, don’t forget about the good ones. In the end, they are the ones that make your life better and free from headaches. Remember, when people pay on time, they also have some expectations. When you have 100k in your bank account, you expect your banker to know you by name; The same applies to its residents. Memorize their names and the composition of their family. Build a relationship, get to know who they are and what their interests are. Treat them like they do, do all necessary repairs on time and every time, follow up on their requests and return their messages on time.

• Move-in welcome pack. The first impression is what lays the foundation for a long-term relationship. When people move into your property, make sure it is clean and no repairs are needed. Help them transfer their utility bills and follow up to make sure they changed to your name. We also normally give small welcome gifts to new residents. We also include a welcome packet that has all the information you need, including our Rent to Own program! The welcome pack is an opportunity to increase your customer’s long-term sales.

• Quarterly Checkups. It is a good idea to do quarterly property inspections and make sure the properties do not need any work or maintenance. Once people decide to move, it’s VERY hard to change their minds, so don’t get to a point where it’s too late and allocate enough time for your good residents. If you don’t have time to inspect the property or visit your residents, send them an email, text, or make a quick phone call to check things out. People always appreciate that.

• Avoid frequent rent increases. If you have high-paying tenants, keep them in the property and don’t raise your rents often. Rent increases will eventually become an issue and may cause your residents to move out. It is especially common in times of recession when property values ​​drop and new owners may offer lower rents due to lower mortgage payments. Rent increases are fine if you are offering an initial discount on your rent or if you have government-subsidized tenants where a small annual rent increase is allowed. One year we decided to raise all of our rents by $25 and lost several tenants. It costs thousands of dollars in unnecessary repairs, advertising costs, and vacancies! It is also your TIME that must be taken into account in re-renting the property. In the end, you don’t know what kind of tenant you’ll end up with and it can cost even more money in the long run. To avoid that, you can implement small “inflationary” rent increases and justify them by an increase in your insurance rate, an increase in property tax, or improvements/updates that have been made to the property.

• Gifts, Postcards and Thank You Letters. Show your residents appreciation by sending them birthday and/or Christmas cards. You’ll be surprised how happy it makes people when they get it. We ALWAYS give gifts to tenants at Christmas and New Years. It’s also a good idea to give them a Home Depot/Lowes gift card or free carpet cleaning. It will improve your property and make your tenants happy. Many times it’s not the gift but the attention you give people, they appreciate it and a gift of $25 will translate into a great long-term relationship with your residents.

• Be consistent and do what you promise. Managing rental properties is a business and should be treated as such. It’s common sense, but a lot of people don’t do what they promise. It makes the landlord look unprofessional and irresponsible. It is your responsibility to be aware of the management if you do not have a management company and it is a full time job! Just do what you promised and don’t promise if you can’t deliver.

• Pay for referrals. You can convert your existing clients into more referrals by sending them a mass email newsletter with new properties or simply brochures with your properties in the mail. It is important to send them to your type “A” and “B” tenants. Good people usually associate with like-minded people and the chances are very high that you will end up getting another good resident. Your tenants would not want to put their relationship at risk and are not likely to refer someone they do not know personally. Like any business, you want to give your residents incentives for referrals and it can be in the form of a commission, referral fee, or rental discount.

• Renew lease EARLY. Get in the habit of submitting your lease renewal at least 2 months before your current lease expires. At this point, residents are not thinking about moving and are more likely to sign another lease. If you do it last minute, chances are they’re already looking elsewhere and have found something better or cheaper, or both. Put the dates on your calendar and remember to mail/e-mail the rental agreement and confirm receipt with the tenant. You need to know as soon as possible if your current resident is moving so you can start advertising the place. It’s also a good idea to review your moving policies if you decide to move.

Politics and procedures.

Being nice doesn’t mean you can avoid policies and procedures. Set your residents’ expectations up front and explain everything they need to know (it should be in writing in your lease) about your late payment policy, property maintenance, pet policy, sublease policy, renters insurance, move-in procedures, security deposit policies, local laws and ordinances. People may not realize the things they do wrong and it will make you look bad in the end. Set all expectations up front and be nice later! Find a tenant retention program that works for you and implement it regularly, try a few things. Remember that everyone is different and what works for one person may not work for another.