Tired of Vacancy? Why Tenants Move & How to Keep Them
Tenants move because they can longer afford the rent, that doesn’t necessarily mean it’s your fault. It’s just the nature of things, people relocate for any number of reasons. The rental business is a constant ebb and flow. Sometimes, it’s out of your control, but there are ways to help retain tenants if you understand their motivations.
Rental Pricing
Often, tenants move because they can longer afford the rent, that doesn’t necessarily mean it’s your fault, though. Maybe your latest rent hike did affect their decision, but there are other factors to consider.
Perhaps they’ve accepted a new job at a lower salary, or their personal expenses have gone up. You may want to consider locking in current rental rates if tenants agree to multi-year leases.
If they simply can afford your new rates, you still don’t have to let them run off. If you have less expensive units or other properties that will fit their budget, provide them with a suitable option. If you expect their financial situation to be short term, consider lowering the rent for a specified period of time.
It’s not the ideal situation, but it may provide them time to get on their feet. Often times it’s cheaper for you when you consider vacancy and all the costs associated with it. Let them know that is a one-time deal and that the offer is only good for 2, 3, or even 6 months — you don’t want them taking advantage of you.
Size of the Space
Sometimes tenants move when their space has become too small or too large for their current situation, provide them with options on one of your other properties. The small space may have been only one of the issues, but if the space was nicer, perhaps you could coax them into renewing their lease.
Providing upgrades to their current home may be enough to get them to stay. If you were planning on doing some remodeling to the kitchen or bathrooms anyway, this might be a suitable time.
As their personal situation changes, they may no longer need or want to take care of a larger home. If the space is too large, again, provide them with more suitable options on one of your other properties.
Stages of Life
There’s certainly a distinction between turning 30 and 70, but the constant is that needs, wants, and expectations change over time. College graduation, marriage, divorce, retirement, or job relocation are legitimate reasons for moving out. Offer help or other options if you can, but you often don’t have control over significant life changes, so don’t sweat it.
Moving on Up
As people land better jobs with higher salaries, they often look to upgrade their lifestyle. If you have larger, more luxurious properties in high-demand neighborhoods in your portfolio, offer to show them. Spotlight the deluxe amenities to entice them.
Buying a Home
As interest rates dip, many renters may find that it is time to buy a house. If rental prices near or exceed mortgage payments, it may make sense for some tenants to purchase. As a property owner, you won’t have much control over this, but making their transition painless may spark them to recommend your property to their friends or family.
Maintenance/Service
Maybe they’re just fed up. This requires some introspection. Are you on top of maintenance and providing the level of service your tenants expect? Be honest. Is the property in need of constant maintenance? And if there are lots of works orders, do they get addressed in a timely fashion?
The Market Changes
Supply and demand fluctuate, which can affect unit pricing. As prices dip, tenants move into nicer homes. To attract new tenants or retain current renters, consider upgrading appliances, countertops, carpeting to make your property more attractive and to add perceived value.
If your amenities are similar to your competition for lower rents, reconsider your pricing for new renters or lowering rents for existing tenants. Your first reaction is probably, “Over my dead body!” but a $20 or $50 monthly rent reduction may turn out to be less expensive than sitting on empty units.
Security
Maybe the neighborhood is changing. If your tenants are afraid in their own community or they are expecting a child, it’s natural for them to seek out an area where they feel safer. Installing cameras or security lighting may help your tenants feel at ease.
There was a time when people rented until they were able to buy a home. That American dream has lapsed. Many people are now more interested in accessibility than ownership — many aren’t even interested in owning a car.
That’s great for the rental housing market, but it has also created fierce competition in many areas. As a property owner, you need to be aware of the needs and expectations of your tenants if you don’t want to lose them to the guy up the street. Tenant retention adds stability to your business. By encouraging lease renewals or long-term leases, you can avoid costs associated with vacancies.