In the real estate game, when we are talking rental properties, one of the most important things that will help you earn more money is long term tenants. The longer the tenant stays, the lower the number of unit turnovers you will have. Turnovers cost money! So as owners, we should do everything possible to keep our tenants – and yes, occasionally there is a bad one we might unfortunately have to “fire” and let vacate! So, let’s talk about a few ways to help the cause!
First, when a unit turns over, even if you have a new tenant whose lease starts the next day, it still costs lots of money. If you manage the rental yourself, you have to advertise, take calls, show the property, write up a lease, get it signed, collect a security deposit, deposit it in the bank, etc. This all takes significant time and energy – and time is money! Alternatively, if you have an outside party do it, it’s usually one-half to one full month of rent you need to pay as a commission.
In addition to the leasing process, you need to inspect the property before the prior tenant leaves, schedule the unit and carpets to be cleaned, have your handyman go in and paint, patch, repair, etc. and you must finalize the old tenant’s lease and security deposit. Then you’ve got to do a move in with the new tenant, document the condition, exchange repair requests from them, coordinate utilities changeovers, etc. What a pain!
All in all, you’re probably going to spend several days of your time handling all these issues, probably a whole week of time or more once all is said and done.
Wouldn’t it have been easier to just keep your existing tenant in place?
Most apartment building surveys find that the main reason people leave their existing rentals is because of poor management. So that’s not being attentive to their issues, not fixing stuff that breaks, blaming the tenant for broken items, etc. So tenants get frustrated and find a better place to live.
Therefore, to keep your tenants as long as possible, which also reduces your hassle factor on rentals, you need to treat your residents with respect. And, keep your properties updated and in good shape, repair items when they break and don’t point the finger at your tenants, handle issues professionally, and don’t let them even consider leaving! To further your devotion and appreciation of them, you might also consider minimal, if any, rent increases for great tenants who are responsible, take care of your property, and work with you if there are issues.
The longer your tenant stays, the more money you earn, there couldn’t be any more simple math than that! The better you are as a landlord, the longer residents will stay and keep those rental checks arriving on time. Good luck.
Leonard Baron is America’s Real Estate Professor – his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate buyers how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com.