5 Easy Steps To Reduce Tenant Turnover and Increase Your Net Rental Income
Landlords can spend a lot of cash on improvements to their income properties to increase the property value and the amount they can charge for rent, increasing their profits over time. But what can an investor without much capital do to increase the bottom line? The number one, least expensive way to increase your net rental income is to reduce tenant turn-over.
Tenant turn-over can be the biggest reoccurring expense for a landlord. The process turning over an apartment can be labor intensive (if you do the work yourself) and costly if you hire a third party to clean, paint and fix up the unit. Add to that, potential vacancy costs as well as leasing fees and your profits start to erode quickly.
Though you can't control when or why your tenants eventually move out, you can take steps to ensure the building or worse, you are not the reason for higher than average vacancy rates. Here's a list of 5 inexpensive ways to reduce tenant turn-over at your rental property:
1. Provide a safe and secure building
This is easy and often over looked. It doesn't cost much to ensure the doors to common areas close and lock properly. The same goes for unit doors. Make sure the property is well lit. If you allow tenants in the basement for access to storage or laundry, paint the walls a bright color and make sure there are lots of lights. Putting the lights on timers or adding sensors for darkness will help keep electric costs down.
2. Provide a clean environment
If you have a safe and secure environment, you can easily keep it clean and orderly. Schedule regular maintenance visits based on the number of occupants and overall wear and tear. Keep the grass cut, the bushes and trees trimmed and the sidewalks clear of ice and snow in the winter. Make sure the front entry is clear of debris, old newspapers and unclaimed mail. A messy and neglected property is not an appealing place for the landlord to live, the tenants will feel the same way.
3. Be responsive to tenant requests
Tenants love to complain about landlords when they feel ignored or slighted. Quickly respond to tenant requests and emergencies, even if they aren't emergencies to you. A quick email, text or phone call will go a long way when your tenant needs your attention. Unhappy tenants stop caring about the property. That means excess wear and tear and neglect that can lead to bigger problems for you down the road.
4. Review tenant history & be proactive
It's not unusual to have tenants move out every 12-24 months simply due to changes in their lifestyles or housing needs, especially if you rent to a younger demographic. Sometimes you'll get lucky and land a tenant that stays for years. To tip the scales in your favor, make sure to review an applicant's rental history. If they are no longer in their 20's and still move every 12-24 months, it's a safe bet they won't stay long. If you want or need to rent to someone with a history of moving frequently, find out why they are always on the move unless you don't mind being a landlord reference for them next time the lease comes up.
On the same note, if you are proactive when leases come up, sometimes you can head off problems. Consider a tenant who loves the property and regretfully informs you they plan to move when you contact them to inquire about a lease renewal. A proactive landlord will find out why and see if there's anything they can do about it. Maybe it's as simple as offering a shorter term lease with options to renew, so the tenant has more flexibility. That tenant could end up staying for years on short term lease extensions, you never know.
5. Offer simple amenities
No one expects small buildings to havea lot of amenities but there are some basics you should consider. Laundry, parking and furnished common areas are some obvious small amenities that don't cost much and in some cases provide additional revenue streams. If you don't have parking but parking is common in the area, look into the available parking options so current and prospective tenants have choices when considering your property.
Brent Hall is a Broker Associate with Jameson Sotheby's International Realty, Chicago. Contact Brent Hall to discuss buying or selling real estate in Chicago.