As a landlord, you know that every week your property stays vacant, you lose money. While there’s pressure to sign on new tenants fast, you still want to make sure you’re finding the applicants and conducting a thorough screening.
But what if there was a way to avoid all that stress and work?
The answer is simple. Keep the tenants you already have and you won’t have to do any of that.
In this article, we’ll look at what you can do to increase your average tenant retention length through incentives and bonuses. We’ll also go over a few day-to-day actions you can implement that’ll help you keep those great tenants longer.
Offer a Lease Renewal Bonus
In today’s economy, workers switch jobs frequently. Your current tenant may have chosen your property since it was close to work. But if that changes, he or she may decide to leave when the lease is up.
To prevent that from happening, you can offer a tenant a lease renewal bonus when he or she first signs the lease.
For example, you can offer a new flat screen TV if the tenant resigns a fixed lease after two years. This is an effective incentive scheme that’s to the benefit of both the landlord and the tenant.
From the tenant’s perspective, the bonus creates loyalty through the tenant’s sense of time invested. At the end of the second year, the tenant feels that most of the work required to get the bonus was done. But by leaving, he or she would be forfeiting the gift.
Think of a gas station coffee loyalty card. How often have you drank those last few horrible cups of coffee just to get the free one?
As for the landlord, the cost of the item spread over three years is less than the cost of a vacant unit, cleaning for showings, advertising, time spent showing the unit and the screening process combined. Not to mention that the expense of the gift is a tax deduction.
Incentivize Good Tenant Behaviour
On top of a renewal bonus, landlords can also offer incentives that promote good tenant behavior such as:
- Not damaging the property;
- Paying rent on time;
- Respecting noise levels for neighbors;
- Not wasting hydro and heating.
The landlord can offer the incentive for over a one or two year period. However, the length of time vs reward needs to be realistic and achievable for the tenant.
As for types of incentives, offer tenants upgrades to the property you normally wouldn’t invest in. For example, you can offer to install a ceiling fan if the tenant doesn’t damage the hardwood floors after the first year. Or if the appliances need to be replaced, offer to buy a new set if rent is paid on time for the year.
These types of incentives are advantageous for landlords on many levels:
First, they encourage the tenant to take care of the property. In the long run, this will save you both time and money by avoiding costly repairs and renovations. These are usually done during vacancies which means you’re not only paying for renovations, but not generating income.
Second, it entices tenants to stay in the property since they feel they contributed to its betterment.
Offer incentives that are permanent to the rental (ceiling fan, appliances, flooring upgrades, fresh paint of their choice, shelving, etc). If you give the tenant a gift that he or she can take with them when they leave, it doesn’t create that same level of attachment.
Offer Referral Signing Incentives
This type of incentive works for landlords with multifamily buildings or who own several properties in one neighborhood.
A tenant referral programme is easy to implement. Let your tenants know that if they refer a friend or family member that signs a lease, you’ll give their friend a welcome gift.
The gift can take several forms such as:
- You covering some moving costs;
- Paying the first month’s utilities bills;
- Providing a voucher for public transportation.
This type of incentive is efficient at retaining tenants since most people enjoy having friends or family living nearby. That proximity makes a tenant rethink moving.
Cost-Free Tenant Retention Tactics
No matter what incentives are offered, if tenants feels uncomfortable or unhappy in your unit, they’ll move out as soon as they can. Here are few points every landlord needs to remember and implement to increase tenant retention (they’re great because they’re free!):
Respond to Tenant Communications Quickly
Landlords have to respond to their tenants quickly.
Just how fast?
Any maintenance issue shouldn’t take more than a few hours for a first response. Even if you don’t have a solution right away, at least let your tenant know you’re looking into the issue.
Other questions or communications by a tenant should be responded to within a day.
The last thing a tenant wants to feel is that he or she is on their own. Tenants that are under the impression they aren’t listened to will be quicker to move out when the lease is up.
Be Personable With Your Tenant
Keep quick notes in your files on your tenant’s kids names, their hobbies or what type of job they do.
When you communicate with them, drop a personal touch to finish it up. For example, if you’re checking in to see if the unit has any maintenance issue, why not finish your email by asking how their child’s school year is going?
These types of personal touches create a deeper connection between the landlord and tenant. In turn, they give a tenant more reasons to stay over the long run. After all, if one moves, who knows if the next tenant will be as nice?
Keep Your Property Relevant and Competitive
While you might have a great relationship with your renters and have great incentive offers in place, if you’re charging too much or your unit is out of date, you may be giving your tenant a reason to move out.
Every six months, take a look at other advertised rentals in your area. Are you charging too much for what you’re offering? Is your property in need of renovations?
Wrapping This Up
Retaining tenants is much cheaper than constantly having to find new ones. Luckily, with the right incentives in place, you can increase how long your average tenant stays. Be creative with what you offer, but also don’t forget that having a good relationship with your tenant goes a long way.