How To Reduce Tenant Turnover
Tenant turnover is something all property owners deal with in the units they own. If not handled properly, it can eat into your profits. Just one bad tenant can negatively impact your investment. To reduce turnover, it’s important to find tenants that are a good fit for the space.
When you do have a vacancy, keep these tips in mind:
- Check your network. Positive word-of-mouth can help fill a vacancy. Current renters can provide future tenant referrals.
- Know your market. Tenants look for different amenities. If you have a commercial space, potential tenants may want to know the foot traffic and where employees can park. While a residential tenant may be interested in knowing if the unit has a washer/dryer, central air, and the rules on visitor parking.
Compare yourself to other spaces.
- Does the unit provide amenities that tenants are looking for in a space?
- What sets your property apart from other units?
- Is the office space adequately wired?
- Look for red flags. Develop a consistent screening process. Some red flags to be cautious of are:
- rental history. Has the potential tenant moved around a lot? Do they have a prior eviction?
- space requirements. Are they requesting any special or unique accommodations to the commercial space?
- expectations. If they are difficult to deal with during the application process, they will likely be challenging tenants. Did you receive an incomplete application? Are they late for the showing?
Why is tenant communication important?
Acquiring new tenants is much costlier and time-consuming than retaining a current one. A key to keeping tenants is communication.
- Keep the lines of communication open. Provide open, honest, and frequent communication. Look for ways to improve tenant communications.
- Discuss preferred means of communication. Most tenants don't reach out unless it's important. Give your tenants multiple ways to contact you -- an email address, a phone number, and an in-case-of-emergency option.
A survey of more than 1,100 renters found that 48% prefer to communicate via text, 28% with emails, 13% like phone calls, and 10% with in-person conversations. Communication preferences are consistent among all age groups, except renters who are 55 or older. That group is more likely to prefer talking on the phone (22%) and less likely to prefer texting (37%).
- Set expectations. Setting expectations upfront will relieve frustration on both sides. For example, if a tenant contacts the emergency line, the response time could be within an hour. For routine maintenance, it may be 5-business days.
- Document policies and keep records. It’s crucial to keep records, in writing, of all your communication with tenants. Store emails communications and document calls.
- Adopt a service mindset. Anticipating tenant needs can keep renters from considering relocating.
Why should you plan for tenant turnover?
Regardless of what you do, some tenant turnover is inevitable. But the better you plan for it, the quicker you can fill the space and lower your vacancy cost.
Develop a budget for tenant turnover and plan for these additional expenses:
- Administration costs. The time it takes to process move-out paperwork, coordinate repairs, and screen applicants.
- Marketing costs. Estimate advertising, signage, and other marketing costs.
- Application processing. Credit, criminal, and eviction reports cost money. But a good screening process can ensure potential tenants are financially responsible, law-abiding, have verifiable income, and positive rental history.
- Cleaning costs. Depending on the condition, you may be able to use the prior tenant’s security deposit for cleaning costs.
- Repair costs. When the space is vacant, it’s a good time to do any updates or repairs. It will make it easier for you to access the unit and make necessary fixes.
- Lost income. The more time the unit is empty, the longer you will go without rental income.
A property management company can help you with communication and screening of tenants for your commercial or rental space. If you are interested in learning more contact Garrett Shames at Glowacki Management Company, LLC at (814) 452-3681.