Although finding new tenants in this landlord-friendly rental market may not be difficult, retaining good tenants is still more cost-effective in most situations.
Finding new tenants is expensive. When an old tenant moves out, the process of finding and keeping a new one involves deep-cleaning and repairing the unit, posting listings in multiple locations, holding showings and other time- and money-consuming events. Add this to the fact that no tenant means no incoming rent, and landlords have many reasons to want to maximize their tenant retention plans.
Building good communication with tenants is the first step toward encouraging lease renewals. In addition to responding promptly to maintenance needs, plan to check in with tenants about once a quarter to make sure things are going well. For multifamily units, you might consider sending out a regular newsletter, hosting an occasional community party, or surveying your tenants to make sure you’re receiving key feedback about the property on a regular basis.
When it comes to lease-renewal specifically, contact tenants a couple of months before the lease expires to get a sense of their future plans. If you initiate the conversation early on, you’ll have a better chance of negotiating renewals from tenants who may be on the fence about whether to leave or stay.
Consider offering a small bonus to tenants who choose to renew their leases. Some landlords offer a week or two of free rent. Others offer upgrades such as new carpet, fresh paint, better appliances, or other attractive improvements. You could also try partnering with local businesses to offer good tenants health club memberships, grocery store gift cards, and other perks.
Start a Referral Program
If your tenants are determined to end at the end of their lease, you may want to offer a small cash incentive for any referral they make that results in a signed lease. If your current tenants are well-mannered and responsible, chances are good that their friends will share these traits.