Any business development website will tell you that keeping clients is five times cheaper than finding new ones, and the same concept applies to residential property owners/managers and their tenants.
You can reduce your cost per acquisition, build a consistent income, and risk-free scale your revenue by developing a tenant retention plan. However, when it comes to managing a rental property, things can become tricky, especially with a tenant. Sometimes it’s in your best interest to have a low turnover rate. It not only is helpful in terms of profits but also makes you a trustworthy property owner in the eyes of a potential tenant.
In this blog, we have discussed some of the best ideas to retain a tenant on a long-term basis.
What is an acceptable tenant retention rate?
In the case of residential properties located in societies, such as Lahore smart city, you should aim to keep 60% of your tenants (which is slightly higher than the national average of 48%).
This means that 72 of the 120 tenants you had in June of last year would still be renting the same property.
Aim a little higher for retail/commercial properties. Retail tenant retention should be around 70% because businesses tend to stay in one place much longer than residents. However, if they are successful in their growth, they will eventually save a deposit for their own space and move on.
Best ideas to retain a tenant for a long-term
Interested in learning how to make your tenant stay? Read the following tips and implement them as you see fit.
Encourage lease renewals
When a lease renewal period approaches, you must consider how you can persuade your tenants to stay with you. This could include providing rental discounts in exchange for a successful renewal or agreeing to previous requests they have made (such as permission to have a pet).
Provide them with a reason to stay, and you’ll be setting yourself up for lower tenant turnover.
Be responsive and maintain open lines of communication
We can assume that tenants are best friends with technology in today’s digital world. This means they’ll expect near-instant communication and will want to be able to contact you via phone, email, your website, and social media.
Be accommodating to good tenants
Tenants who have proven themselves to be trustworthy individuals should be given some leeway now and then.
For instance, you could give them permission to paint the walls (as long as they repaint when they leave). Allow for late fees caused by illness or personal circumstances.
You are more likely to retain tenants if you are an understanding property manager.
All tenants must be pre-qualified and screened
Retention rates will be the least of landlords’ concerns if they do not begin with a qualified and quality tenant. The most important part of the rental process is tenant screening, which has a measurable impact on the potential turnover rate. In addition to income, credit, and criminal background checks, it is critical to request and follow up with former landlord references.
Early detection of tenants who may cause property damage, breach their lease, or pay rent late will allow property owners to begin the lease with the best option possible.
Maintaining rental rate
However, being overly aggressive with rental rates and increases is likely to drive tenants away rather than entice them to stay. While tenants expect periodic increases, it is critical to ask references open-ended questions.
Instead of raising the rate at each renewal, take the time to research local comps and ensure your property does not outpace comparable rentals. Consider keeping the rate just below market and only requesting minor increases. This means that cost-conscious tenants will be hard-pressed to find a better deal and, as a result, will be more willing to renew their current lease.
In the end, with the ongoing inflation around the world, it is best to retain a tenant. You may not find a tenant as good or responsible as the current one, so it’s in your best interest to be humble in your dealings.
