One of the best ways to increase both your cash flow and your long-term ROI as a rental property owner in Sarasota, Bradenton, or the surrounding areas is by placing and retaining high quality tenants. Good tenants drive a good investment experience. When you have the right residents in place, you know you’ll collect rent on time, keep your property maintained, and enjoy a conflict-free rental period.
Finding the right tenants is important.
Even more important, however, is keeping those tenants. You want your good residents to renew their lease agreements year after year. It prevents turnover and vacancy costs. It leaves your investment property in a more stable condition. It requires less work from you.
Vacancy is expensive. When you are constantly moving one tenant out and another tenant in, you’ll find yourself paying a number of expenses, including utility costs, maintenance, cleaning, and marketing. The best way to avoid vacancy is by keeping the tenants you currently have in place. Low turnover will usually indicate a great investment performance.
So, how can you motivate those good tenants to renew their lease agreement when the initial term has come to an end?
We have some ideas, and we think you’ll find these tips and tricks an effective way to retain your tenants.
Make Communication with Tenants a Priority
Tenant retention vastly improves when there’s a strong tenant relationship in place. As you likely know, relationships start with and depend upon good communication.
When you make tenant communication a priority, you have a stronger tenant relationship and a reliable path towards a retention plan.
One of the things you need to communicate clearly is your set of expectations.
At Anchor Down Property Management, we are sure to share our expectations with tenants early, before the lease is even signed. When tenants understand their responsibilities and requirements, they’re more likely to succeed and less likely to shy away from asking questions or reporting concerns. This is an important part of developing and maintaining good tenant relationships.
If tenants understand what you expect from them, there’s less confusion and little conflict. They’ll renew their lease agreement because you’re easy to work with and they feel supported and informed.
When tenants get in touch with us, we’re available and accessible. We’re more than that – we’re friendly. There’s a perception that the landlord/tenant relationship has to be adversarial, but that’s not really true. You want to have a professional, positive relationship with your residents – especially if you’re working towards better retention.
We work well with our tenants because we communicate openly and transparently. We expect the same from them. It helps our tenant retention numbers and it creates a good rental experience for everyone.
Screen for Long-Term Gulf Coast Tenants
Try to begin retaining tenants as early as the screening process.
When you’re looking for a long-term renter who will not only fulfill the lease term but renew the lease when it’s time, you should inspect your rental applications for evidence that you’ve found such a tenant.
The tenant screening process should focus on qualifications. Before you start thinking about retention, you want to look at credit reports and income and criminal histories. You want to know there are no previous evictions and no history of criminal convictions or debts being owed to former landlords.
Once you have established through a consistent and legally compliant screening process that you’re working with a tenant who meets your basic qualifying standards, take a closer look at their rental history. This will tell you if they’re likely to leave after the lease term or renew for another year.
Are these tenants who seem to move every year? Or, are they likely to spend three or four years in one place before moving on? It makes sense to consider this when you’re deciding who you will approve to live in your home. A tenant with great credit who barely spends a year at a time in their rental home probably isn’t a financial risk – but you’re likely going to be looking for a new tenant in a year’s time.
You can ask a potential tenant if they’re looking for something long-term. If they’re trying to buy a house in the next year, you’re likely to lose them. Find out what their plans are for the next few years.
All of your screening criteria must be compliant with state and federal fair housing laws. But, it’s not hard to get an idea of how long you can expect a tenant to stay. Don’t be afraid to investigate the length of their former lease terms.
Tenant Retention Depends on a Positive Rental Experience
Rental property owners who are communicative and available have an easier time retaining tenants than landlords who are non-responsive or difficult. We’ve talked about the importance of communication. Use your communication tools to ensure your tenants are having a positive rental experience. Be a resource and a source of support whenever possible.
Keep in touch without being overbearing. Tenants are looking for privacy. You don’t need to be calling or sending messages every week. But, if there’s something happening in town that you think might interest them or you know road construction is planned for the neighborhood, send a quick update. They’ll appreciate that you thought to share this information with them.
Gratitude and manners can go a long way. Say thank you when rent is paid on time or your tenant is accommodating to vendors, pest control people, or neighbors who need help. Keep your interactions positive and professional.
Don’t be afraid to reward good tenants as well. Incentives are a great way to nudge your renters towards a lease renewal. If rent is paid on time six months in a row, consider sending them a gift card for a local coffee shop. It’s the opposite of a late fee; they’re getting positive reinforcement and they’ll remember that you appreciate them.
Prioritize Maintenance Responses
No tenant is going to stay in a property when their maintenance requests aren’t taken seriously.
Avoiding the necessary repairs is bad for tenant retention and it’s also bad for your property.
Make maintenance a priority, and respond to repair needs with a sense of urgency and respect for your tenant’s requests.
Good maintenance policies and procedures require a partnership between you and your residents. Communicate your maintenance procedures, and then be responsive.
Even if you can’t fix something right away, let your tenants know where things stand and what you plan to do about the problem moving forward. When something needs to be repaired or replaced, over-communicating with your tenant is usually the best way to go. They don’t want to think that you have forgotten about the repair or that it’s not a priority for you.
With routine and regular improvements at your property, you’ll keep your tenants. Provide a welcoming, attractive home that tenants don’t want to leave. Replace out-of-date appliances, make sure the walls have fresh paint, and install floors that are easy to maintain and clean.
Renovations can also be used to incentivize lease renewals. Maybe your tenants want hard surface flooring instead of carpet. Agree to that for one or two rooms once the lease is renewed. You can offer to put a fresh coat of paint on all the walls or update the landscaping. Maybe they’ve asked about installing a video doorbell or they’re interested in smart home features that allow them to sync their own technology with things like the thermostat, the coffee maker, and the lights.
Both repairs and regular improvements will reduce tenant turnover and even increase the amount you are able to charge in rent. When your residents get a sense that you’re willing to improve the property and make it better for them, they’ll want to stay.
Rental Increases Must Match the Local Sarasota/Bradenton Rental Market
You’ll likely raise the rent when your tenant’s lease term ends and you’re negotiating a renewal.
Rental increases are normal and expected. Most tenants will not be surprised if you approach them at renewal time with a slight increase in what they’re paying every month.
That doesn’t mean you should offer a renewal at a ridiculously high rate. The goal is not to chase away a great tenant with an unreasonable rental increase. Study the local rental market and look at the homes that are similar to your rental. You’ll want to know what other owners are asking. Chances are, you’ll be able to raise your own rent while still staying at or just below the market prices. This will encourage tenants to stay because even though their rent is going up, they don’t have to worry about the expense and hassle of moving into a new place that probably will cost just as much.
There are a number of other things you can do to ensure tenants want to stay. If you provide a pet-friendly property, for example, you’re likely to retain tenants more easily. Consider including something like high speed Wi-Fi in the rental amount, or landscaping costs.
We have lots of retention ideas, and we’d love to share them with you. If you have any questions about how to place and keep great tenants in Sarasota, Bradenton, or the surrounding areas, please contact us at Anchor Down Property Management.