Tenant retention helps you avoid vacancy and turnover costs, and it also establishes a consistent schedule of incoming rents. Many of the rental property owners we talk to are always asking how to retain tenants.
Let’s focus on four important goals of owning rental property. As the owner of a rental home, you want to:
Rent a property out quickly
Keep it rented as long as you can
Maintain the property to a reasonable standard while limiting cost
Reduce liability over the life of ownership
San Jose property managers have systems in place to achieve all four of those goals.
Strong Tenant Retention Helps Avoid Vacancy
The goal of tenant retention is to avoid the dirtiest word in the entire industry: vacancy.
Costs for vacancy include advertising and preparing the property for rent. You’re paying for these and losing rental income at the same time, so avoiding vacancy is paramount.
There are factors that dictate whether a tenant will stay in your property or move, and some of those things can be controlled. You can’t control a tenant’s job loss, health concerns, or family issues. You can’t control the economy moving towards a telecommuting model. During COVID-19, we’ve seen that renters no longer have to live in a place that’s close to work. Many of them are working from home, and they’re doing it from Idaho or Colorado or maybe even Hawaii if they’re smart.
What can we control? Rent increases can cause good tenants to move. When you put the property on the rental market, you’re trying to get the most money possible. When you have a tenant in place, you want to trail the market a little bit. You don’t want to jack the rent up to market value every year because there will be competition in soft years. Tenants will find a cheaper place to live or maybe they will buy a home.
Always do a rent increase notice with purpose. If your rent is $2,500 today, and the market says you could be earning $3,000, there’s probably room for an increase. Go up a couple hundred dollars if necessary, but don’t meet the $3,000 rent. We recommend you trail the market by 3 to 5%.
Maintain your San Jose Rental Property
Maintaining your property leads to higher tenant retention. It’s hard to believe, but a lot of owners don’t want to spend any money at all on their rental property.
As an investment owner myself and as a property manager who manages hundreds of properties, I can tell you that it is very common. It’s also a big mistake.
Respond to maintenance quickly and show your tenants that you expect the property to be well taken care of. Don’t blame your tenant when things break. Water heaters are going to leak over time. There’s little your tenant can do to prevent it.
Encourage tenants to report maintenance even if you don’t think you are going to fix it. Knowledge is power, and you want to know when something is wrong at the property.
Develop a Positive Tenant Relationship
You also want to develop a good relationship with your tenant. I’m not suggesting you become best friends and have them over for dinner. Set your own boundaries and keep a professional distance. However, you should know who they are and who their families are. Get to know them on a personal level not so they can manipulate you, but so that they know that you care.
Provide Great Technology and Ease
You also want to offer technology and other conveniences that might benefit your tenants. As a private owner, you can offer them access to your handyman. As professional San Jose property managers, we don’t do that because we want our tenants to call us so we can control maintenance issues. But, if it’s just you managing on your own and you trust your handyman, let your tenants contact that person directly to speed up the maintenance cycle.
If you are able to do so, offer online rental payments. At Cal West we have a 24-hour maintenance line where they can reach out to us at any time. Encourage your tenants to text you when there’s a problem or a question. This is a quick way to communicate, and many tenants prefer it to a phone call.
Everybody deserves to be treated with dignity and respect, and your tenants are no exception to that. Your residents want to live in a home they can be proud of, and you can help make that happen by not letting your investment property turn into an ATM machine. When we forget the people that make it possible for us to cashflow our property, then it is just an ATM.