If you want to be successful in managing your real estate portfolio, you need to consider the impact of tenant retention, as well as its inverse, tenant turnover. Higher tenant retention rates are understandably and intuitively linked to higher profitability, but why exactly is this the case? And what steps can you take to maximize your tenant retention rate?
What Is Tenant Retention?
Tenant retention is a measure of how consistently you keep tenants in your units. When a tenant chooses to leave, either at the end of their natural lease or as a result of early lease termination, it qualifies as tenant turnover and leaves you with a vacancy. Having tenants continue to follow their leases, and renew their leases given the opportunity increases your tenant retention rate.
Why Is Tenant Retention Valuable?
Why is it that tenant retention is so valuable?
For starters, it prevents you from spending excessive time and money on filling vacancies. Instead of having to track down someone new for the unit, you can continue relying on your existing tenants, ultimately saving you money on marketing, lead management, onboarding, and other expenses.
Tenant retention also increases the consistency of your income. Even if you’re successful in your property management and marketing strategies, it could be months before you fill those vacancies. Tenant retention increases the predictability and sufficiency of your cash flow.
Tenant retention is even more valuable when you already have excellent tenants. If you know you have people who take good care of your units, pay their rent on time, and engage with others in a respectful manner, it’s in your best interests to keep them for as long as possible. Even with a good tenant screening strategy in place, each new tenant you bring into your property portfolio is going to be a risk.
Maximizing Tenant Retention
These are some of the most important strategies for maximizing tenant retention:
- Screen your tenants. One of the most important aspects of your strategy is going to be screening your tenants. Tenant screening is a practice designed to weed out unfavorable and unreliable candidates, so you can focus on better fits for your units. During this process, you’ll look at each candidate’s employment history, credit score, rental history, and other factors. It’s tempting to fill vacancies as quickly as possible as a landlord, but you’re often better off taking your time and finding someone who can stay in your property for the long term.
- Practice onboarding. Tenant onboarding is designed to make tenants more comfortable and better acclimated to the environment offered by your property. It’s not something that costs much in terms of time, money, or effort, but it can help tenants get used to the environment and set them up for success. It’s also an opportunity for you to get to know your tenants and build some initial rapport with them.
- Make a good first impression. Hopefully, you already intuitively understand the power of first impressions. Whether we like it or not, our perceptions are often colored by our initial experiences with both people and things. Accordingly, you should go out of your way to make sure that you make a great first impression on your new tenants, both with respect to your own personality and with respect to your property.
- Maintain open communication. Communication can prevent most problems and help you solve the problems that slip through the cracks much quicker and more easily. Accordingly, you should make it a point to maintain open and honest communication with your tenants at all times. They need to be able to reach you consistently, and you need to be willing to give them good answers for their questions.
- Resolve issues fast. When issues inevitably arise with your property, try to resolve them quickly. If you can’t solve them quickly, explain why and make sure your tenant knows that you’re working on them.
- Compromise to find solutions. If you want to find solutions for problems consistently, you need to be willing to compromise. Sometimes, adjusting your approach or making a small sacrifice is all it takes to resolve an issue.
- Remain flexible. Occasionally, your tenants are going to struggle or bend the rules of renting your property. If you can remain flexible, you’ll be in a much better position to retain your tenants indefinitely.
- Show appreciation. Finally, make it a point to show appreciation to your tenants. Even a simple holiday card with a thank-you message can make a big impact.
Tenant retention doesn’t come automatically, nor is it always straightforward to deal with. However, if you’re willing to proactively invest in tenant retention, you should be able to decrease your expenses, increase the consistency and volume of your revenue, and ultimately make your property portfolio more profitable.
Founder Dinis Guarda
IntelligentHQ Your New Business Network.
IntelligentHQ is a Business network and an expert source for finance, capital markets and intelligence for thousands of global business professionals, startups, and companies.
We exist at the point of intersection between technology, social media, finance and innovation.
IntelligentHQ leverages innovation and scale of social digital technology, analytics, news, and distribution to create an unparalleled, full digital medium and social business networks spectrum.
IntelligentHQ is working hard, to become a trusted, and indispensable source of business news and analytics, within financial services and its associated supply chains and ecosystems
