A good tenant is worth their weight in gold. Much has been written about how to deal with inevitable problem tenants, minimizing their impact on the profitability of your investment. However, the flip side, of course, is retaining good tenants who take good care of your investment, while paying your taxes and mortgage for you in the long run.
Keep good tenants happy, and they'll refer other good tenants your way. But you won't get the good referrals if you're nickel-and-diming your residents, being slow to make reasonable and necessary repairs, or otherwise falling short on your duties as a landlord. Sure, you can get away with it for a while, but you'll ultimately see the quality of your tenants and your properties decline—and consequently, your rental income.
In the short-term, showing tenants that they're appreciated may cost a bit out of pocket. In the long run, however, a modest investment in simple customer relations pays dividends. Never forget that you're in fierce competition with other landlords as well as home sellers and their real estate agents to keep good tenants in your units.
8 Cost-Effective Ways to Show Your Tenant Appreciation
- Leave a welcome letter and a small gift basket: Place this on the kitchen counter when new tenants move in. When tenants renew their lease for another year, you can repeat this gesture by sending a kind note and a small gift basket.
- Give a gift card to a local hardware or home goods store: Tell them to spend it on whatever they need to make their unit feel like home. The amount depends on your budget, of course, but it doesn't have to be a large amount to make the point.
- Replace an aging appliance: You don't have to wait until the tenant moves out to put in that brand new refrigerator. If you're planning on doing the replacement anyway, go ahead and do it now. Why would you invest in making the unit more attractive to future tenants without first trying to keep your current ones? A new or upgraded appliance can be a noticeable quality of life improvement--and it might just be the tipping point for them to renew their lease over looking for a new place.
- Organize a tenant appreciation event: This works better for landlords and property managers of larger buildings, but it can be as simple as a small cookout for tenants and their families. This will strengthen your relationship with your tenants, as well as their relationships with one another—creating a community within the building that can be a tremendous asset.
- Track tenants' birthdays and key anniversaries, and send them a card or a small gift: A gift card toward dinner at a local restaurant goes a long way in making tenants feel special, as does the simple act of commemorating days that are significant to them.
- Give a small gift or cut a small break on the rent for a few months of on-time payments: It's a small price to pay to help ensure six more months of on-time payments. Prompt, reliable tenants save you a lot of money and hassle.
- Jump on the chance to make repairs: It's your property you're repairing, and you almost never save money by waiting. Tackling a request faster than expected is also a great way to differentiate yourself from a lot of landlords. It may not be the sole reason that they renew; but on the other hand, many landlords have lost tenants and suffered vacancies because they were slow to handle repairs. Stay well-capitalized so you don't have to break a sweat over unexpected repairs, and always budget at least 5% of your property's value for repairs per year.
- Give a small gift card to your local grocery store right before major holidays: Just $25 will always be appreciated (and put to good use).
3 Extraordinary Examples of Tenant Appreciation
Here are some of our favorite stories of landlords going above and beyond for their tenants:
- Paying off layaway: One landlord went to the local Toys "R" Us store and paid off every purchase that his tenant (a single mom) had on layaway so that her kids could have a good Christmas. We particularly love this story because the tenant had had to make a lot of sacrifices in order to pay her rent on time that year. It wasn't a ton of money in the grand scheme of things, but it meant the world to that family.
- Referral to Toys for Tots: Another landlord we know (who has a lot of Section 8 tenants) makes a point of referring his tenants with children to Toys for Tots, a charity program sponsored by the U.S. Marine Corps Reserve. The best part is that his tenants don't know he's doing the referrals!
- Annual gifts: This landlord surprises renewing tenants with a TV at his annual walk-through. He explains, "Is it worth $149 to keep your tenant for one year? What is it worth to keep them for two? That's a small expense to not have to find a new tenant!" After 3 years, he buys his tenants a small computer system, which costs him less than $200. Occasionally, he gives out a premium or tenant appreciation gift worth around $50. He says, "In 3 years, I've spent $400 to keep a tenant. If I have one vacant month, it will cost much more than that. My tenants are thinking about that next gift!"