When you find a good tenant, it is generally a good idea to keep them for as long as possible.
As a landlord, you are wanting to maximize your income and that means having tenants inside your property for as long as possible. If you continue to see your tenants only stay for a short time, then it could be costing you big.
Before we dive into how to keep your tenants longer, let’s look at why it is so important to increase their duration.
The Cost of Tenant Turnover
Tenant Turnover costs are easily one of the largest “hidden costs” of owning a rental property. Having a positive cash flow is king to property owners. Having a lot of tenant turnover can be one of the main reasons you are not experiencing a positive cash flow.
A few of the costs that crop up are,
1. A Halt in cash flow.
When you have no tenants, then you have no money coming in. This cost is actually an opportunity cost based off of how much income a tenant would have paid you.
2. Advertising costs
Based on how active your market is you may need to run print ads, classifieds, online ads, etc…
3. Repair/cleaning costs
This one could cost you a lot of money out of pocket. You will rarely be able to simply turn the property around without any cleaning or repairs.
4. Application costs
You will have to schedule showings, answer phone calls and maintain the property.
4. Screening costs
You will have to run criminal reports and background checks on each prospective tenant. This can add up throughout a tenant search.
If your search lasts longer than anticipated, then you could be looking at $2,000 - $3,000 dollars of lost income and expenses while you try to replace your tenant.
It is imperative that you keep your tenants as long as possible to retain a positive cash flow and avoid these cost.
Now let’s dive into how to actually go about keeping them for longer.
#1 Update Your Screening Process
Not what you were expecting?
Setting yourself up for success at the beginning will make everything easier for you down the road. This involves creating a screening process that will help you accept quality tenants and avoid bad ones who will cause you headaches.
There are a few key factors to look for when screening a client for success.
- Income – Is their income at least 3x as much as the monthly rent?
- Previous Evictions – They shouldn’t have any. Ever.
- Good References – They MUST have good references. You also need to call these references.
- Clean Background – They shouldn’t have any felonies or negative criminal acts on their record.
The entire point of a screening process is to make sure that you avoid bad tenants. You are betting that the person in front of you will be responsible enough to pay their rent. If you make the wrong decision then it could cost you BIG time.
Do yourself a favor and invest a little bit more on the front end so that you can save tons of money and energy later.
If you are looking to totally revamp your client screening process then we recommend using this helpful tool/guide from biggerpockets.com. It is extremely in-depth and will help you put together an effective tenant screening process.
# 2 Value Tenant Concerns
Valuing your tenant’s concerns is often undervalued by property owners. It can go a long way in showing your tenants that you care about them and want them for the long haul.
You should aim to take every request seriously, no matter how ridiculous it may seem.
Besides financial issues, the largest reasons that tenants leave their rental is because of lousy communication and service.
Responding to and completing maintenance requests is an area where it is extremely easy to hit a homerun. If you can master responding to maintenance requests, then it will be a big step towards showing your tenants that you really value them.
If your tenant issues a maintenance request and you don’t respond, or they don’t know how to issue one, then they will feel like they aren’t being heard. This can be extremely frustrating to them and will push them to leave as soon as possible.
This can be solved by creating a clear process about how maintenance requests get communicated and resolved. You can post this process in the rental property so that it is easy to see. At International Golf Realty, we use a tenant portal so that tenants can log in and let us know of any issues that need attention.
Research different processes and test to find what process will work best for you and your tenants. The main objective is to use a process that is simple and will allow you to react quickly to any issues.
Lastly, setting up a shortlist of contractors that you trust and who can get the job done quickly will save you a ton of time. After a relationship have been built with them, you can see if they will give you a discount on their services for continued business.
What to Remember
- Positive cash flow is king.
- Avoiding tenant turnover is important or it will cost you big.
- Improve and update your screening process to find quality tenants.
- This resource helps a ton when setting up a good screening process.
- Value tenant concerns to maintain a healthy relationship.
The International Golf Realty Solution
At International Golf Realty we specialize in finding quality tenants for your property. We know the importance of each step of the process. From the marketing to the screening and placement, we make sure it all happens.
In the case that a tenant does need to be removed, we handle evictions and greatly speed up the tenant replacement process with our rental marketing experience.
If you are feeling overwhelmed by the amount of time your rental property is taking from you, then consider contacting us about managing your property.
We do all the hard work and you reap the benefits! You can contact us here for more information or give us a call at (904) 940-9990.
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