Rental property turnover: the bane of an investor’s existence.
It can’t be understated just how critical maintaining a robust occupancy rate is. For real estate investors, turnover doesn’t just mean a temporary vacancy. It means:
- Loss of cash flow.
- Fees associated with cleaning and repairs.
- Fees for renewed marketing efforts.
- Extra work and costs to screen potential residents.
…All the while, you still have a mortgage to pay and utilities to maintain. It’s never a favorable situation. Now, everyone experiences vacancies from time to time. It’s not something we can eliminate entirely.
However, we can and should work to minimize these instances. Doing so not only prevents these woeful costs and lack of cash flow but can strengthen your portfolio in the long run.
Here’s what turnkey investors can do:
6 Ways Turnkey Investors Help Reduce Resident Turnover
#1 – Hire the Right Management Team
Property management isn’t a job for everyone. It’s not easy, though popular opinion would have you think otherwise. Here’s the thing: many management companies and individuals don’t prioritize the right things. They aren’t as diligent as they should be. Don’t look for cheap management. Look for quality.
Your team needs to have the best interests of you, your property, and the residents in mind. They need the experience to know what to do in challenging situations, how to stay cool in a crisis, and how to defuse tense situations. They must be good communicators and honor the lease agreement as well as the law.
#2 – Thoughtfully Select Markets & Properties
We all know that location matters. But it’s not just about maximizing property values or targeting high-occupancy areas. Consider how compatible the property may be with various demographics. A young family, for instance, won’t likely enjoy living in an area known for noise and partying. Younger residents won’t want to be surrounded by retirees. Knowing your neighborhood – or ensuring your management team does – helps select those with the greatest long-term potential.
#3 – Value Attention to Detail
Generally speaking, a rental property will be no one’s dream home. But that’s no excuse to take shortcuts. When your property allows its residents to feel pride, they’ll feel attached to it. They’ll stay longer. Not only that, but attention to detail regarding maintenance and renovation work also means fewer frustrations for everyone. People can tell when you care about the property. And it helps them care about it, too.
Further Reading: Here’s What Rental Residents REALLY Want in SFRs
#4 – Brainstorm Loyalty Rewards
The best property managers will work with residents for a mutually beneficial outcome. As an investor, you have a say in these things, too. You may not be hands-on, but you can make your priorities and desires clear. Maybe you want to incentivize your residents to sign a two-year lease agreement instead of one. Stay competitive, offer reasonable options and flexibility, and work with residents you wish to keep. It pays off in the end.
#5 – Continue to Know Your Market
Knowing your market isn’t a one-time thing. Your neighborhood will change around you. Demographics shift. Laws change. As you stay up-to-date on the climate of your markets, you’ll be better able to effectively market and target people who want to stay long-term. If you’re out of touch, you may emphasize the wrong things, or your marketing efforts may fail to reach the right people.
What do your residents value? Can you offer wiggle room for customization within reason? What about pets? Are there amenities you can add?
Part of succeeding here – in capturing a high–quality resident’s loyalty – is anticipating their needs and desires. If you tick off all the right boxes, leaving will be the last thing on their mind.
#6 – Collaborate with Your Team
Some passive investors make the mistake of trying to be completely “hands-off.” We’ll tell you right now – it doesn’t work. You need to be engaged with your investments in a big-picture way. That means paying close attention to reports and updates and consulting with your portfolio advisor and management team.
Your priorities must align. If you want to do something, ask. Find out if it’s feasible. Test to see if it’s wise. You may be able to work together to enact strategies to keep quality residents for as long as possible.
Ready to invest but worried about risk? Let your REI Nation advisor help!
