One of the hardest things about owning a rental property is finding tenants. It’s a lot of work and it never feels like there’s a good time to do that work.
The Cost of Tenant Turnover
The site My Smart Move breaks down the cost of tenant turnover well. There are the hours that you have to invest in finding a new tenant as well as the money lost while you wait to fill that vacant property.
The time needed to invest includes the time to clean the property and repair any damage made by the previous tenant. You can’t list the property until these items are checked off your to-do list.
After that, you need to post the property listing, which may or may not cost a posting fee. You need to set up showings and then show the property. You have to process applications to make sure the applicants can afford the monthly rent and have good credit.
All that takes a lot of time.
In addition to the money that you spend on cleaning supplies, repairs, and background checks, you’re also going to have to pay the mortgage and any HOA dues that you might have.
My Smart Moves conservatively estimates the total cost of tenant turnover at $1,750 per month and that’s assuming $950 per month in mortgage and $300 per month in HOA dues.
How to Lower Tenant Turnover
That’s why the best plan for any rental property is to find someone who will pay the rent on time and stay for the long-term. While that’s easier said than done, there are things you can do to make it easier for a tenant to re-up her lease.
Respond Quickly to Tenants and Take Action
A tenant wants to feel like he matters, so it’s important to show him respect. Don’t go longer than 24 hours to respond to a text, phone call or email from your tenant. Make yourself available to hear any concerns and then act. If a tenant complains about a leaking faucet for a month and nothing is done, he’s likely to leave once the lease is up.
If you like the tenant, it’s important that you respond quickly to his concerns and take appropriate action.
Get to Know Your Tenant
Be friendly with your tenant. If they call, ask them how their kids are doing or their dog. Let him know what think of him as something more than just a monthly rent check.
Avoid Large Increases in Rent
Understandably, you might want to increase the rent every year, but you also want to look at the situation from the tenant’s perspective. It’s important to know whether that rent increase is going to be something the tenant can afford or if it’s going to force him to look for somewhere else to live.
Ask in Advance
Ask a tenant three months in advance if she wants to renew her lease and mention any rent increases when you do. Asking in advance gives you and her plenty of time to make plans. If she signs, perfect. If she doesn’t, now you’re not scrambling to fill the vacancy at the last minute.
Offer Incentives for Signing Longer Leases
If you like your tenant and you want her to stick around, offer an incentive for signing a two or three-year lease. Something like free Wi-Fi or a small discount on the rent can go a long way toward keeping a tenant long term.
Maintain the Property
One of the best ways to keep a tenant around is to let her know that the property is well taken care of. If you have a yard, make sure that you’re paying for a landscaper, so it continues to look good. Pay to pressure wash the outside of the home or make sure that your HOA is providing that service. Keep your property looking clean and well-kept and you’re likely to keep your tenant longer.