We'd like to believe your tenants aren't bad people, and sometimes life happens, like injuries, layoffs, and car issues. You know, those unexpected expenses that can make the month's rent late. Here are four ways to help them avoid late fees, keep everyone happy, and retain them as suitable tenants.
4 Strategies to Increase Tenant Retention
1. Communicate Well
Often overlooked, being a responsive property owner is a game-changing strategy for tenancy satisfaction, mainly because landlords have 3-7 days to fix critical repairs to the rental property and 30 days to fix non-critical ones.
Mitigating that unease and discomfort with clear and prompt communication can be the difference between a tenant scrolling their phone to look at a different place and a potential tenant who stays for years.
Often, tenants see the handyman come in, find the issue, take pictures, sign a report, and leave. They don't understand that repairs need to be approved; see if it is a covered repair by insurance, and let your team approve the associated costs with the landlord. But telling them ahead of time will help. So do it, and don't keep them in the dark as former landlords may have.
2. Incentivize Rent Payments
Property managers can incentivize tenants to stay by offering 2-5% early pay discounts. This incentive reduces the chances of unpaid rent, as they will strive for the bonus.
Reduced rent, calculated over 12 months, can entice them to pay on time, all the time. We've even heard of landlords offering a double bonus if a tenant paid consecutively for 12 months on time.
Additional ways include:
- Using a rent payment app increases the tenants' credit score in a gamified way. It notifies the credit bureaus and gives credit reports, and the app treats it like a game of achievements via positive reinforcement. Credit checks have never been this exciting; we can guarantee that.
- Allowing tenants to pay rent with a credit card. Sure, associated fees might increase the total sum, but for tenants, an option that will enable them to kick the can down the road with credit lines is preferred when cash is low. In addition, this prevents nonpayment and can assure that your property stands out among others if the tenant moves in the future.
3. Maintain the Property
Communication is vital, especially during repairs. But fixing the property damage in a timely manner is even more critical.
How quickly you respond is meaningless if you promise to solve something but don't. Due to this, the landlord-tenant relationship is unnecessarily strained and undermines your credibility. Prospective tenants don't want to move into a place with a history of leaving things until the last minute. Furthermore, being on top of things, and preemptive, is another way to outshine other property managers.
If you know the AC is ancient, inspect it before July hits your Arizona/Nevada properties.
Tenants notice when you abide by their maintenance requests, but they appreciate when you go beyond that — by providing ongoing services, no matter how time-consuming, such as:
- Pest control
- Roof maintenance
- Grounds maintenance
- Replacing older furniture (if you manage furnished) with newer sofas and TVs.
It shows them that you care about the property and the people living there.
On the flip side, few tenants are likely to renew their lease if it constantly takes days or weeks to fix simple problems and the property is declining.
Not only will this strategy help you keep great tenants, but it will also help you maintain the property's condition, improve its longevity, and minimize make-ready expenses when you have a tenant turnover.
4. Be Flexible (With Good Tenants)
Neuroplasticity is the flexibility of the mind, and contortionists demonstrate the flexibility of the body. But what's needed here is more straightforward — just concessions in good faith — flexibility in your real estate relationship.
Sometimes just a good talk between your team, or the landlord, with the tenant can be the sensible thing to do. Try to understand their issues, empathize, and come up with a creative win-win solution, because going down the other path hurts you as well:
- Evictions lead to:
- Legal Action
- Cashflow issues
And, after all, they're a good tenant, right?
Perfect tenants can also have mishaps or go through a tough week—forcing them to pay late, communicate slowly, and have the place a bit messier than usual.
Sometimes it means waiving the late fees. Sometimes it's allowing partial rent payment on a later date, with an agreement to pay the rest later - with or without interest (remember, creativity).
Of course, this applies to tenants who have been with you for a while, not those who'll take advantage. It's in your best interest to build a relationship with them—those of a customer and seller, not a boss and employee.