Avoiding tenant turnover is one of the biggest challenges of rental ownership. As you know, tenant turnover is the period of time your units lie vacant between tenants.
Keeping a good tenant is almost always preferable to turning over a unit. You won’t generate rent revenue during this time, and you’ll also have to do extensive cleaning and any necessary repairs or renovations. Depending on the rental market, it may take anywhere from a few months to years before another qualified tenant moves in.
Because turnover is time and money-consuming, you should avoid or reduce it by any of several means. There are many ways to reduce the likelihood of frequent turnover, convince tenants to renew, or decrease turnover time when it does happen.
Here are five ways to reduce tenant turnover in your rental business.
- Tenant Screening
You can reduce tenant turnover before you even have tenants. Through tenant screening, you can cater your search for tenants who are likely to renew their leases.
For instance, let’s say you have two prospective tenants. They have identical income and credit histories, and both criminal and eviction reports come back clean. However, one tenant has lived in their prior rental for four years, while the other frequently jumped housing in the past few years.
Which one would you choose? Obviously, the tenant with a more stable rental history is more likely to stick around in the long run.
- Improve Tenant Satisfaction
If your rental business has high turnover rates, perhaps there’s a problem with tenant satisfaction. Ask tenants who don’t renew their leases why they’re moving: is it because of job opportunities or relationship milestones? Or are tenants unhappy with your housing?
Depending on what your tenants report, there are any number of ways to improve tenant satisfaction. Maybe you should do more personal networking with your tenants and build stronger relationships. Perhaps better communication (friendlier, more professional, more/less frequent) would help tenants feel more motivated to stay.
Other ideas include improving the quality or speed of your maintenance services, decreasing high rent prices, or using property management software to streamline the rental pipeline.
- Offer Incentives
Let’s say your tenants are intent on leaving. What can you do?
In this case, it might make sense to offer some incentives. Examples include a discounted rent rate for early renewals, a raffle or other giveaway for renewed leases, or anything else you can think of. The key is to offer incentives early, before renters have had a chance to lock down new housing or even think about moving out.
Incentives shouldn’t be so big as to make a serious dent in your finances. Sometimes a small incentive is enough to push a tenant to renew their lease, especially for those who may be considering new housing but are still on the fence.
- Negotiate Renewals
Depending on which incentives you offer, your tenants may want to negotiate. For instance, they might ask for decreased rent, specific repairs or renovations, relaxed policies, or changes to other lease terms.
Before you wave them off, consider the cost of turnover. If they leave, you’ll not only be stuck with a vacant unit, but you’ll also need to find, screen, and move in a new tenant. If you do the math, you might find that you’ll lose more money with several months of vacancy than you would by decreasing rent slightly.
- Rental Marketing
You tried incentives, negotiating, and personal appeals, but your tenant still wants to leave. What now?
It’s time to search for a new tenant. Start by checking that your company website and rental listings are up-to-date. If you use property management software, you may have access to rental listing syndication. With this feature, you can upload identical listings to multiple listing sites simultaneously.
You can also use a marketing strategy called audience targeting. The idea is that by concentrating your advertising efforts toward the renters you want (those with long-term intentions), you will receive more applicants who want long-term housing.
For instance, maybe you avoid advertising near your city’s college campus, as students and younger adults tend to want one- or two-year leases. Instead, focus on populations more likely to stay put, such as seniors or family units.
Using audience targeting, you can avoid turnover by carefully curating your applicant pool to include more renters who are looking for long-term leases and housing stability.
Reducing Turnover for Long-Term Rental Stability
Tenant turnover is an inevitable reality for most landlords. However, this doesn’t mean turnover rates are entirely out of your control. With the right marketing strategies and some pointed incentives or negotiation, you can reduce the effects of turnover and focus on growing your rental business.