Finding amazing tenants as a landlord is only the first half of the challenge.. The second half is keeping them! Many surveys done around the world, including the US and Australia have shown that renters move roughly every two years.
Which means you need to pay for moving, cleaning, and spend time listing your rental. Don’t forget tenant screenings, apartment showings, or the alternative route of paying for a tenant placement service. And of course, there’s the thing we all dread – a loss of income during periods where your rental unit is vacant.
Happy tenants stick around and will save you money on turnover costs (and often take great care of the rental!). Unhappy tenants move out and leave you with expenses.
What can you do to retain your top quality tenants?
The key is to have a tenant retention strategy. It doesn’t have to be overly complicated – but if you can put some simple systems in place, you’re on your way to keeping your best tenants.
First, let’s understand why tenants move. Sometimes, they move because they are unhappy, but that may not be the case. Tenants also move for reasons like:
It’s also important to consider other external factors like major changes to the economy or rental market availability when looking at renters’ moving behaviour. The COVID-19 pandemic led to a lower turnover rate in 2020. Canada saw a 3.3% decrease in tenant turnover – from 17.3% in 2019 to 14% in 2020 – making it the largest variation since the data was first compiled in 2016 (CMHC). However, the vacancy rate also went up. As a result of higher vacancy rates and less people moving, it takes longer to fill a vacant apartment. This is where tenant retention becomes even more important!
The tenant lifecycle is also much shorter than the homeowner lifecycle.
All to say, while it’s important to have systems in place to retain great tenants, know that there will always be external factors outside of your control.
Vacancy is a normal part of the rental cycle. However, in order to prevent financial loss, it’s good to keep vacancies to a minimum. Having a tenant retention strategy in place will help you hold onto good tenants longer and keep your units occupied.
We looked at the reasons tenants move that are likely out of your control – but what about the things you can control? Here are some common reasons tenants move that can be avoided:
Do tenants know how to contact you if there is a maintenance issue, like heat not working or a broken appliance? Have you set clear expectations around timing to respond to emergency and non-emergency requests? Have a documented process that is shared with the tenant to establish this clarity. Do they know the difference between an emergency and non-emergency request? It all comes down to managing expectations and proper communication.
You should have a maintenance form that a tenant can fill out for non-emergency requests. A digital form in an online tenant portal is ideal. You can also include a phone number they can call if there is an urgent issue. Make sure to communicate this to them. A quick text message can be a problem because it 1) puts you in the position of having to answer immediately, usually resulting in a lot of back and forth and 2) text messages can easily be lost making it difficult to document your communications. Email however can be a good format. Also, note that some municipalities, like Ottawa, require you to log maintenance requests.
And of course, respond to maintenance requests promptly. You should also be making sure to do preventive maintenance which will save you time and money in the long run and keep your tenants happy.
This one is pretty straightforward – be kind. If you want to go above and beyond, you can even consider a small token of appreciation to say thanks, like a gift card to a local coffee shop. This is especially nice around Christmas. Another way to be kind to your tenants is by making sure you are always treating them fairly and equally. Establish a great relationship with your tenants and be professional and kind. For a professional landlord, tenants are your customers. How would you treat a customer?
Amenities and perks are a great way to improve your tenant retention. Some helpful amenities include extra storage (e.g. storage lockers); secure access; on premises laundry; wifi/Internet; outdoor facilities (e.g. gardens and sitting areas); bicycle storage and on-premises parking.
When you consider the lifetime value of a tenant vs. the maintenance costs for these amenities, you might find it worthwhile. Valuable amenities that your tenants will love using are a great way to keep them in your rental property for longer. You can also offer perks for re-signing a lease.
It’s helpful to check in on your tenants every now and then to make sure everything is going well and they are happy. Ask about their experience with the unit, the neighbours and the building itself. Not only will your tenant appreciate that you care to ask, but you’ll be able to identify any opportunities for improvement and find out where your rental’s strengths are.
Be sure to not overwhelm your tenants by checking in too often – keep it to every now and then. Checking in with your tenants too often can be a cause for anxiety and leave them feeling smothered.
One of the biggest causes of conflict is poorly managed expectations. That’s why clear communication is everything. Make sure that your tenant clearly understands the lease, and respond to their comments or questions clearly and openly. Transparency goes a long way!
Being a good listener is just as important as being good at explaining yourself when it comes to communication. Be sure to listen intently to your tenants. Show them that you care.
Tenant retention is profitable! Save yourself from costly turnover costs, interrupted rent payments and time spent on marketing with a solid tenant retention strategy.
Want to learn more tips and strategies for a successful rental property? Take a look at our Investor’s Handbook.
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