When working with rentals there are a few factors that are taken into account. One of the main factors is vacancy and another is length of term. We want to have our properties priced correctly so we can attract good quality tenants to keep our vacancy low, but we also want to try and keep those tenants for a long period of time. In order to do this, a question that comes up a lot for Landlords is whether or not they should lower the rent for a longer-term lease.
How Can We Keep Tenants Longer Term?
One of the clear ways to keep Tenants for a longer period of time is to have them sign long-term leases on the date of signing. Meaning, instead of signing a 1-year lease, you can sign them to an 18-month or 24 month lease. Doing so will ensure that your vacancy rate stays low, but it may also allow a Tenant who does not keep the property well to stay in the property for longer which would not be good especially if you own apartments with multiple units next to each other.
Another way to keep Tenants for a longer term is to incentivize them to stay. Some Landlords incentivize their Tenants to stay through offering discounts if specific milestones are hit (i.e. clean inspection, on time rent, etc.). Some Landlords will focus on providing amenities that other properties do not have which will incentivize the Tenants to stay longer as well (i.e. laundry services, pools, etc.).
Investing in your Tenants and their care of your property is a very good way in which to keep Tenants happy and keep the cost of investing in your own property to add services down. This is why most Landlords will go with one of the first options. That being said, going with the amenities approach can often prove successful in that you could keep the rents at market or slightly higher, attract quality Tenants, and keep those Tenants for longer.
What Type of Landlord Are you?
At the end of the day it comes down to what type of Landlord you are and want to be? Some Landlords want to drop the price and some Landlords want to increase services. A big factor in this could be the location and class of your property, because some properties will not allow for a return on ROI for addition of services. This is where your property management company comes in handy. Hiring a quality property management company can help provide a higher quality property for the Tenants where they are happy and their needs are taken care of, therefore taking care of the needs of the Landlord ($$$). On top of that, having a quality property management company can allow for hands off management which will increase the value of your investment and allow for passive investment income as well.
If you would like any help with management, or have any questions about management please feel free to contact us using the information below.
Until next time,