Finding tenants can be an exhausting process for independent landlords, especially in today’s challenging real estate market. One friend of ours has shown his suburban townhome to more than a dozen prospective tenants, all of whom have shown little interest. Competition is fierce in this market, and as every good salesperson knows, it’s far easier and less expensive to keep an existing customer than find a new one. The same is true in the rental business, but unfortunately, some landlords fail to take care of their tenants, even when the cost and effort required is negligable!
Consider this example: If your rental property sits vacant for 2 months (not unusual in today’s market), you sacrifice 2 months of rent and you have to put the time and money into finding a new tenant. For a $1000 / month property, this could easily amount to $2500 of lost revenue and 50 hours of your time. Even if you value your time at only $10/hour, that’s a whopping $3000 in losses. Now, what if you had put only 30%, or even 10% of that back into your rental property and existing tenants. Could you have enticed your tenants to stay? While no action on your part will ensure your renters will re-sign for another year, taking some proactive steps can greatly increase your odds. Here’s our ideas below. Feel free to weigh in with your own.
10 Tips to Get Your Renters to Sign the Next Lease
1. Offer a re-signing bonus for a lease extension. The simplest and easiest way to incentivize your renters to stay is to offer them a discount for signing a new 12-month lease. Consider how much money and time it would cost you to find new tenants. Take 50% of that, and give it to your tenants as a retention bonus. If you give them the discount all in the first month, it amounts to hundreds of extra dollars in their pockets immediately! (Note: You should notify your tenants at least 90 days in advance of your intention to offer this discount, to encourage them not to look at other options).
2. Replace an appliance, carpet, or other major item at least once every year. Unless your property is brand new, chances are the appliances are going to need replacing. If the appliances are fine, consider replacing the carpet or another item. While a new refrigerator or stove represents a significant out of pocket cost, these items last for 10-15 years. Amortized over that period, a stove may only cost you $50/year. Plus, they will be attractive to new tenants, and they increase the value of the home.
3. Send your tenants birthday, anniversary, and holiday cards. While we’re a big fan of including some type of gift certificate in these, it’s not necessary. Just don’t send a pre-packaged card with just your signature. Write your tenants a hand-written note inside.
4. Send your tenants on a dinner night out after 6 months of on-time rental payments. Send your tenants a card six months into their lease with a thank you for paying on time each month. Send them out to a dinner for two to a nice restaurant in the area. Be sure to get a gift certificate large enough to cover the entire meal and drinks.
5. Forgive a late rent payment. As I wrote about in this article on late rental payments, you should always forgive at least one late payment from your tentants. Everyone makes a mistake once in a while, and this gesture will pay dividends in goodwill and potential lease renewals.
6. Be responsive to issues. If you’re tenant calls at 9:00pm at night to report a water leak, take action immediately to help resolve the situation. Call a plumber, even if it means paying a little extra to get someone there early in the morning. Don’t put off any issues of water, electricity, heating and air conditioning, safety, or even convenience (e.g., dishwasher fails). Remember, you would want these fixed immediately too.
7. Offer optional conveniences. Consider finding a lawn and garden or snow removal service to take care of the property, and offer this service for a premium to your tenants. Some tenants will prefer everything be taken care of for them, others would rather save the $ and do it themselves.
8. Plant gardens twice per year. Everyone likes getting flowers. Once or twice per year (Spring / late Summer), plant flowers out front of your rental property. It will certainly brighten your tenant’s day, and remind them how great it is to rent from you.
9. Pass along community benefits. If your HOA provides a pool or tennis court membership, ensure your tenants receive the pool/court passes for their own use. Many communities offer a variety of services like this. Ensure your tenants know about them and can take advantage of them.
10. Offer to pay for the materials if your tenants upgrade the property. Some tenants would love to improve your property (by say, adding chair rail to a room, planting gardens, etc.) Offer to reimburse them for the materials if they provide the labor. Just ensure that you agree with their proposed improvements ahead of time.
What do you think? What ideas do you use to retain tenants? Are you a tenant? What is your landlord doing for you?
Photo by Kivanc.