Landlords always want to know how to make a better return (ROI)
on their rental homes:
Can we raise the rents?
Can the pet fee be an annual expense?
Can we charge for air usage within the confines of the
home? (OK, I haven’t really heard
the last question… yet)
As a Charlotte
property manager who has been in the business for a while, there is one clear
cut winner on how to maximize rental home ROI.
And this earth-shattering, nugget of wisdom is…
Keep your tenants.
That’s it. If they
stay and sign long term leases, landlords avoid a litany of costs: vacancy,
fix-up, utilities, lawn care, potential vandalism, property management tenant
procurement and marketing fees, potential non-paying tenant moving in… and
that’s just off the top of my head.
Wise landlords want to do everything they can to keep their
tenants.
Here are 4 tips to keep them:
1. Think about not
raising the rent. I’ve heard of some
landlords who do not raise the rent EVER for as long as their tenants
stay! That seems extreme to me, but I
can see the rationale.
2. If #1 (no rental
increases EVER) doesn’t work for you, cap the annual rental rate increases at
5%. Or offer to raise the rent 5% on a
1-year lease while simultaneously offering to extend the lease at a lesser
rental rate for a multi-year lease.
(Incentives really work!- part 1)
3. Pay your property
manager for extending your tenant’s lease.
This will align their interest with yours. We have a client who proactively offers us
$400.00 to extend his tenants’ leases. I
think he has a great understanding of where his ROI comes from. (Incentives really work!- part 2)
4. (Most important)
Execute the normal blocking & tackling of property management. In other words, do what you’re supposed to
do. Make needed repairs in a timely
fashion, don’t be a jerk, and set proper expectations and meet them. Remember: Moving is a pain; don’t make your
tenants feel they need to because their rental situation is unbearable.
There are many other tips on how to keep rental tenants
(give them rental anniversary gifts, free months of rent for renewing,
etc.). However, it is not disputed that
tenant retention is the #1 component of achieving a good ROI. As the old song goes, “It’s cheaper to keep
her!”
Brett Furniss is the President & Owner of BDF Realty (Charlotte Residential
Property Management), the trusted real estate advisor for Charlotte
Posts
