Your tenant wants to renew their lease! I think we can all agree that tenant renewals are good news! It means continuing cash flow without incurring the costs of vacancies, marketing, and normal rent-ready maintenance and improvements. Is there anything an owner/landlord/ or manager can do to encourage renewals? You bet! Any combination of the following actions during the tenancy may provide the golden carrot at the end of the lease.
Have you ever considered the value of an offer to reward timely payments of rent with a discount on the first month of the new lease? Don't forget, there are lots of costs to a tenant when they decide to move. How likely is it your tenant really wants to avoid the costs of moving, application fees, and deposits? Seal the deal and offer them an incentive to renew their lease. The incentive will almost certainly be less than the costs you are avoiding by keeping good tenants
Providing superior maintenance services throughout a tenancy is a really big deal. It is one thing that a landlord can control that, when done poorly, encourages a tenancy to end at the lease conclusion.
Here is an out-of-the-box idea. Send your tenants a gift card after six months of successful occupancy thanking them for being excellent tenants. Don't go over the top or the tenants will be suspicious. Just something that shows a token of your ongoing appreciation of their tenancy.
What if 30 to 60 days before renewal, in return for renewing their lease, you offer to make an improvement to the home? I am not suggesting dealing with deferred maintenance issues. More along the lines of an improvement that the tenants suggest from their time living in the home. You are saving some funds for capital improvements..right? Why wait until the home is vacant but make those improvements while it is rented. Obviously, these are handyman projects and not remodeling. How about hanging new blinds or rebuilding a closet? Or investing in new appliances or replacing a 25-year-old air conditioner that is going to die next summer anyway. The offer is a win-win as it obtains your renewal while you approve a project that will improve the future marketability and value of the home.
Did I mention superior maintenance? Am I repeating myself? Yes I am. It does not hurt to mention it again.
Unfortunately, poor maintenance is the one single biggest mistake I see owners make. Dragging your feet on repairs or maintenance items will not encourage a tenant to renew. Stalling to avoid spending funds (no the tenants do not forget about their requests) or searching endlessly for the cheapest way to solve a problem will send a clear message to the tenants about your priorities. Put yourself in your tenant's shoes...would you stay if the owner ignores your requests to have hot water on cold winter mornings?
Tenant renewals can be the difference between a positive return on your investment and a loss. The margins are that thin. Once you have a tenant, as long as they obey the lease, why not do all you can to treat them like a very important customer that you want to keep for a long time?
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