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1031 Exchange v. Selling and Purchasing

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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,

Sanjeev (Sunny) Advani
Lic 01869863
Office Lic 02012941

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About The Author
Sanjeev Advani

• Hundreds of Investment Real Estate transactions successfully closed • 350+ Units currently under Property Management • 3+ Years of Construction Management Experience • Certified Property Manager, CCIM (In Progress) • Bachelors in Finance • Bakersfield, CA Native Deep Dive: I have been licensed in real estate for almost 10 years, and I have been specializing in investment and commercial real estate for the past 6 years. Through the years I have worked with Real Estate Developers, Investors, Average Joes, and many more. I am a Bakersfield native, and my educational background is in Finance. I have just completed the CPM (Certified Property Manager) certification which is one of the most prestigious designations in the Property Management Industry, with less than 1800 members world wide. I am also the President of the Board for Habitat for Humanity Golden Empire, the Vice President of the Board for Income Property Association of Kern County (IPAK), and Vice Chair of the Commercial Investment committee at the Board of Realtors. I look forward to working with you towards your real estate investment goals. Sunny Advani California Agent Lic# 01869863 | California Broker Lic# 02012941 Email: Sunny@RE-Synergy.com | Phone: +1 661 235 5726