Tenant retention ideas

Tenant retention ideas

Dave VonaPro Member
Real Estate Investor · Centennial, CO · Member since 2015 · 106 posts · 38 votes

Hi, I wanted to hear what other people are doing to keep their tenants happy and renewing their leases. I don't have any rental properties yet but I'm always interested in hearing what can be done to increase the time a tenant stays at a property, in other words, reducing the churn. I understand that providing a clean, safe, and affordable property is going to go a long way, but what other creative approaches can be used. A friend of mine recently talked to the owner of company that manages 5,000 units in Texas. They have programs that offer ESL (English as a Second Language) classes, medical services, and after school programs for the kids. In addition, the managers at each property develop very close relationships with the tenants so they know and their family on a first name basis, and their histories. Providing this level of customer service has allowed this owner to reduce his churn to about 35%, when I believe the national average is over 50%. Smaller complexes and landlords of SFH's may not be able to provide these types of services but I'm sure there are other ways that these owners can approach customer service.

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Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
7y

First, treat tenants like the customers (and humans) they are, not like money machines that sole purpose is to  pay  down your mortgage. Dont over charge for things that are your cost of business.  Respond promptly when there is an issue.  Have a real human answer the phone.  

Basically, treat people how you would like to be treated. Give them good value for your price point. 

The above is what I do.  My tenants give me high praise and happily refer others to my units -  therefore i rarely have openings and when i do it fills quicklly  

I will be interested to read what others do.  

Thanks for asking this question:)

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  • Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    First, treat tenants like the customers (and humans) they are, not like money machines that sole purpose is to  pay  down your mortgage. Dont over charge for things that are your cost of business.  Respond promptly when there is an issue.  Have a real human answer the phone.  

    Basically, treat people how you would like to be treated. Give them good value for your price point. 

    The above is what I do.  My tenants give me high praise and happily refer others to my units -  therefore i rarely have openings and when i do it fills quicklly  

    I will be interested to read what others do.  

    Thanks for asking this question:)

  • Investor · Member since 2018 · 32 posts · 59 votes
    7y

    Hi Dave, I am not at the level of 5000 units....yet ;-) but working my way up there! But I'll share with you that when managing SFR-4 unit properties, I front loaded all the capital expenses and rented properties in flip condition to tenants that were looking to upgrade. I found those leads from property manages that I created relationships with and built a reputation of "this owner will make sure repairs are done right the first time". I'm grateful and fortunate to share that I have not had any turnover, and I do raise the rents every year like clockwork. When someone leaves, I'm hopeful it will be because they are relocating or buying a home, not because they were unsatisfied with my rentals.

    Now for the 5+ unit apartment buildings, which brings you in the commercial loans category, then value add to raise the rents is what I am after.  I'm not paying a whole lot of attention to turnover.  I really dont care.  I'm sure some colleagues will disagree, but the cool thing is i'm only offering my perspective.  I come from the attitude of treating my rentals with the attitude of making them profitable and attractive to tenants so they don't want to leave, but if they leave, that is okay with me.  Its just business.  I have redone the landscaping, trimmed trees and bushes, upgraded the swamp coolers to HVAC dual-pack units, upgraded single pane aluminum windows to dual pane, and removed carpet in place of laminate flooring.  Kitchen cabinets are new and granite counter tops are installed in every unit.  Parking always has been retrofitted with LED automatic lights and we upgrade the plumbing plus fixtures...not just change out the faucets.  We literally change the piping to PEX and move on.  I have noticed that I'm getting higher than average rents, retention is high, and we dont have an issue with appraisals on the refinance as well as going to market.  In all its a much satisfactory process.  I've also had 1031 buyers with time constraints pay retail knowing that the properties are in great shape, records to match, and property management is on point.  

    Hope this helps! 

  • Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    7y
    @Dave Vona I have 1970s ranches and I blew a foot of insulation in each one. Keeping the heating and cooling bills low is a win-win. Saves tenants money thus keeps them content and reduces wear and tear on your system.
  • Dan HandfordPro Member
    Investor · Lexington, SC · Member since 2018 · 779 posts · 501 votes
    7y

    @Dave Vona I believe getting too close to the tenants is a bad thing. I don't always look at tenant retention as much as I look at the NOI of a property. I can easily get the physical occupancy up on a property but the economic occupancy is what we are looking at the most.

  • Investor · USA · Member since 2015 · 325 posts · 447 votes
    7y
    @Dave Vona I have thought a lot about this and the balance between being a scroog vs a pushover buddy. I think how you retain folks is offer great service (returning calls, fixing property, compassionate towards issues they have, ect.) If they feel like it is an easy place to live and comfortable. They will stay. I have great retention of tenants, and I would say average 3-4 years per tenant. I have also though of doing a BBQ at our apartment complex to see if we could get people to start developing lasting relationships. I have heard that makes folks stay longer. I would think that would be important in an apartment because folks tend to leave more often.
  • Dave VonaPro Member
    OP
    Real Estate Investor · Centennial, CO · Member since 2015 · 106 posts · 38 votes
    7y

    Thanks for all the input, these are great ideas.  I think there's a lot to be said of the idea of using common sense and just treating your tenants well, keeping up on maintenance and being honest with them.  

    @Joseph Lopez I see there could be a difference in the approach when looking at SFH - 4 unit compared to larger multifamily. Although, it seems that turnover will always result in additional costs, such as lost rent, cleaning/painting, marketing, etc. and therefor be something to avoid.

    @Kai Van Leuven I've heard of others having BBQ's as well as part of a retention plan.  I've also heard of some landlords using a point system where the tenant earns points for each year they renew the lease.  They can use the points towards something like a house cleaning or similar.  

  • Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    So i am confused.  Why are some folks equating professional, friendly, prompt service with being a push over?  I strive to be the best landlord I can be - it is my job after all - but i am NOT a push over, nor do I allow tenants to cross my boundaries....    if any tenant tries they find out quickly that i am a pretty tough chick ; )

    Suggest that those that feel reputation does not matter to go online and read up on the various local PMs or APT complexes and see that how you treat your tenants can and does have an affect on your bottom line.  

  • Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y
    You treat them right by fixing up any issues and providing a safe comfortable place to live . Nothing more is required . In return they provide cashflow and a way to pay your mortgage . These aren’t friends . You don’t buy them Christmas gifts bake them cookies or go to their birthday parties . Run your business like a business ! Don’t be a hobby landlord by beIng their” buddy “ most tenants despise their landlord and won’t appreciate anything you offer anyway . Promptly fixing / repairing stuff is more than most landlords offer so you’ll be that much ahead of the competition. Be logIcal about thIs , A cheesy gift card around the holidays is not going to keep them from moving out if that’s what they intend to do ! Hobby landlords lose money by being pushovers and tenants spot a pushover a mile away
  • Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    @Dennis M. what exactly is a “hobby landlord”? 

  • Rental Property Investor · Los Angeles, CA · Member since 2018 · 74 posts · 33 votes
    7y

    @Mary M. a hobby landlord is someone who treats managing their properties as a hobby, rather than as a business. They view it as a fun activity, they make decisions based on what feels good/nice/exciting, and treat their tenants like friends instead of using systems, making decisions supported by numbers/facts, treating tenants like clients, etc.

  • Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    so are folks equating being friendly, approachable and kind as being a hobby landlord?  If treating your tenants as clients that are valued brings in MORE $$ why is it treated as being negative?  (i have not read anyone saying/suggesting  to be a "buddy" or BFF to a tenant?)  I really am so curious about this..... 

  • Member since 2018 · 16 posts · 7 votes
    7y
    @Dave Vona. I like the idea of a reward system.
  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    7y

    @Dave Vona It’s always wise to be cognizant about turnover as any longtime landlord will attest that turnover/vacancy are the true cash flow killer in the rental game. 

    Personally, I’m in the camp with @Dennis M. What I do is make sure any repair requests from the tenant are handled promptly and without any unnecessary delay. Doesn’t matter if it’s a minor faucet leak or a more major complaint like their heater is out in the middle of winter. It’s not uncommon for me to handle it the same day, or within a day or two at the most even in the busiest of seasons. 

    Tenants appreciate that. Plus, it shows them that I care about my property and (I believe) encourages them to do the same. 

    I must be doing something right because my “newest” tenant has been with me for over 3 years and the rest have all been with me for over 5 years. 

  • Rental Property Investor · Los Angeles, CA · Member since 2018 · 74 posts · 33 votes
    7y
    Originally posted by @Mary M.:

    so are folks equating being friendly, approachable and kind as being a hobby landlord?  If treating your tenants as clients that are valued brings in MORE $$ why is it treated as being negative?  (i have not read anyone saying/suggesting  to be a "buddy" or BFF to a tenant?)  I really am so curious about this..... 

    I believe that because the lines can get blurred if you aren't careful, people have to be self-aware of whether they are treating landlording like a business that emphasizes friendliness, approachability, and kindness as core values of their business versus people who are friendly, approachable, and kind but also happen to be landlords.

  • Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    @Austin P., Thank you.  

    I guess what bothers me about this "hobby landlord"  phrase is it tries to demoralize folks instead of teaching them.  Now, I am pretty confident in how I run my business - I was in  business world most of my life, was part of a couple start up sales for MM of $$, so I know what pays....  But when folks toss out the "hobby landlord" phase it shows me that they are not really trying to dialog, instead they are trying to demean and make folks feel bad - which isnt helpful.   I would suggest instead just sticking to stating what works and why...  this is a better way to encourage folks to learn as then they are open instead of shut down.  :) 

  • Rental Property Investor · Los Angeles, CA · Member since 2018 · 74 posts · 33 votes
    7y

    @Mary M. I think you bring up an excellent point! I couldn't agree more that the emphasis should be focused on providing constructive info that can teach people what works and what doesn't.

  • Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
    7y

    It depends on your market, people are going to move even if you're providing them the best property at the lowest cost. Customer service is very important but if you give an inch, they'll take a mile. I agree with what some have said here; tenants are not friends and this is a business. You should do the exact opposite and do not try to build personal relationships with your tenants because when they stop paying or they break the lease it will be more difficult for you to take care of the problem. All you have to do is follow the laws, provide an excellent line of communication, respond to maintenance requests quickly, and don't be a slumlord. 

  • Dave VonaPro Member
    OP
    Real Estate Investor · Centennial, CO · Member since 2015 · 106 posts · 38 votes
    7y

    It seems that the large property managers (1,000 units+) are moving in the direction of providing what @ ty

    @Account Closed noted: excellent customer service, a community feel, and incentives, in addition to a clean, safe place to live.   The reason they do it is because they've figured out that this approach increases their profits through customer retention.  If the large operators are taking this approach then I would think the smaller operator with just a few units could learn from them and apply similar strategies.

  • Contractor · San Jose, CA · Member since 2018 · 262 posts · 407 votes
    7y
    @Dave Vona Hi Dave, In my personal experience good service goes a long way. Take care of your properties, attend to issues as they arise, perform semi annual inspections to make sure your property is running to par and provide a clean and safe environment for your tenant. That simple. You are simply running a business, and it wont always be perfect. Tenant turnover will happen from time to time especially in multifamily properties but thats ok, another tenant will come. No need to bribe, befriend your tenants, just do good business, be fair and stay within rental market and all will work itself out. Best of luck! Junior
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