Tenant turnover. For the real estate investor, that phrase alone can strike fear into your heart. Maybe not a lot, but at least some! No one enjoys going through the turnover phase. Unless the tenant was a real headache, having a vacancy isn’t ideal!
Before getting to the obvious points of the article about vacancies being bad and how to avoid them, I want to give a tremendous shout-out to our incredible property management teams in all three cities.
We learned in our leadership meetings this week that we are managing north of 3,500 properties and that we have fewer than 100 vacancies combined in all three cities!
That alone is an astounding statistic, but even more incredible is that there are only five properties...5 properties...that have been vacant for longer than 30 days. Each was a move-out and all five have applications working on them.
Premier property management in Memphis and PPMG of Texas have incredible team members and fantastic leadership and they are absolutely destroying the myth that there is "good time" to rent houses. If you pay attention to details during renovations and train your team to treat tenants firmly, yet with respect, then renting properties at the top of the rent range and for 2-year terms or longer, is not difficult!
Here are some lessons we have learned!
We all know that for real estate investors who invest in single-family homes, losing your tenant for any reason means losing out on 100% of your income until you find a new tenant. Vacancies are the most costly period for you, period!
So as an investor, you want to do everything in your power to reduce tenant turnover. If you have a good tenant, you want to keep that tenant around for as long as possible.
Maybe you think things are going great...
All signs point to smooth sailing. You expect your tenant to renew their lease. But suddenly—they don’t. You tenants move out. They’ve moved on not to home ownership, but to another rental. In your area.
Whoa, hold up!
Before a tenant chooses you, in the beginning, it’s a little more understandable when they choose to live elsewhere. Not all things are under your control, and sometimes, it’s a matter of taste or personal circumstances that you really just can’t do a thing about.
But when a tenant has lived in your property and chooses to move in with the competition, it should bring up a lot of red flags. There’s likely something that you, or by extension, your management, could’ve done in this scenario to keep you tenant around.
6 Reasons Tenants Move in With Your Competition
1. They didn’t feel heard or respected.
The last thing you want is for your tenant to start resenting your managers. When your tenants don’t feel like their requests and concerns are being heard, or like their managers don’t care about them, that’s exactly what will happen. Do you know how your managers treat your tenants? Do you know that your tenants’ requests are being responded to promptly and professionally?
It’s so, so important that your tenants feel taken care of! If they don’t feel valued, you run the risk of driving them away. Always make sure that your tenants are heard, feel respected and clearly understand whatever decisions you make about the property with their opportunity for input!
2. Conditions were deteriorating.
No one wants to live in a property that’s falling apart. No, we’re not calling for year-round renovations, but we do insist on the regular, sensible maintenance that’s appropriate and necessary. Replace old appliances that aren’t working well, keep paint fresh, and update fixtures.
Regular maintenance can go a long way and even the smallest investments in your property can show a tenant that you care about their living conditions.
I am not sure there is any bigger way to show disrespect to a tenant than to show disrespect to the property itself. If you do not care about the condition of the property, then honestly, how could you care about your tenants or whether they stay or not?
3. Communication was lacking.
Are your managers good at communicating? Do they respond to requests? Do they give proper notice? Do they take the time to just check in and make sure things are okay? An attentive property management staff is one of the best assets you can have, because, again: they make your tenant feel valued and cared for. That’s invaluable.
4. They stopped feeling safe.
Safety is so important. No one wants to be in a place where they don’t feel safe! In some ways, it’s hard to control that if your property isn’t in a “good” neighborhood, but you can also take steps to help your tenants feel and truly be safe. Locks, reinforcements, reliable security systems: all of these can help. Even just increasing exterior lighting and keeping outdoor bushes trimmed back increases a sense of security.
If your tenants don’t feel safe and you don’t do anything to help solve that problem, they’re likely to go elsewhere, period.
5. Prices weren’t competitive anymore.
Watch your prices. Especially now, where rent prices are on the rise but wages are still suffering, a few dollars a month can make all the difference in the world to your tenants. If you don’t want to risk losing a good tenant, you have to keep your prices in-line with whatever advantage comes from renting your properties. If they’ve been loyal and good, you may want to see how you can sweeten the deal for them come time for lease renewal!
Painting rooms, cleaning floors, sprucing up the exterior are all inexpensive ways to keep a tenant satisfied and are less-costly than a move-out. When you are charging a higher rent than nearby properties and offering a cleaner property and better management, your tenant will not only appreciate small gestures at renewal time, often they will expect them and stay without question when you offer them.
If you provide the promise of better properties and service and then deliver upon that promise, tenants will always be willing to pay a higher price. Break that promise and your prices will no longer be competitive and your tenants will leave.
6. You didn’t have the amenities they wanted.
Sure, you may have the boxes ticked for working appliances, but what else can you offer your tenants? What is your competition offering? Satellite TV? Wi-fi? Washer and dryer? There are amenities and incentives that yes, will cost you something, but they may tip your tenants, current and future, into your favor.
Now, we’re not saying that if your tenant leaves, it’s always something you did wrong.
Sometimes life happens and it really is out of your control! But we always encourage investors to examine themselves, their systems, and how they do business to ensure that the very best services are being provided. Reducing tenant turnover isn't just good for your business, it's good for your reputation.
Looking to provide the best services to your tenants while also experiencing real estate investment at its most passive?