Every landlord will have a vacant rental at one point or another, even if you own units in one of the best cities for real estate. Although vacancies can take a chunk out of your profits, there are ways to offset this. Often the difference between a successful investor and a struggling one lies in their ability to lease vacancies quickly, or better yet, reduce tenancy turnover.
Join us below as we reveal the top 10 reasons good tenants leave at the end of a lease. With this knowledge, landlords can implement strategies to keep current tenants whenever possible.
Rents on the Rise
Money is at the root of why a lot of good tenants leave at the end of the lease. If the increase is more than they can cope with, or they’ve recently suffered a financial setback, increased rent may force them out.
In such a scenario, landlords have two options. You could offer them cheaper accommodation on another property if you have any. Alternatively, negotiating to reduce the amount of increase in order to keep a great tenant may be worth it. Take into account the time, money, turnover expenses, and lost rent you could face looking for a new occupant.
While it is important for owners to maintain a profit margin and cover expenses, we do not recommend more than a 3-5% increase per year. However, every market, property, and situation is different. Thus, working with a trusted local management company can more efficiently handle renewal matters and market research, all while keeping owner’s best interests in mind.
Change in Voucher Status
Like the point above, a change in voucher status can affect a renter’s ability to afford the monthly rent. If your tenant’s rental allowances increase or decrease, they might be on the lookout for a more befitting apartment.
Depending on the program, housing authorities reevaluate a tenant’s finances annually and adjust contribution amounts as needed. If you have other vacancies in your portfolio that are more suited to their needs, let them know immediately.
Also, keep in mind that many housing authorities will limit the amount of rent increase a landlord can ask for. Therefore, be sure to check local requirements or limits before offering renewal to your tenant.
Initially, your apartment was perfect fit, but perhaps those tenant needs have evolved over the course of the lease. Wether it is an expanding family, need for a home office space, one of the best pro tips for resident retention is to encourage tenant feedback.
It is not always possible to build out more rooms, but there are things an owner might be able to do that will reduce turnover. Perhaps you can convince them to stay with a few renovations such as putting a wall up for a home office. In addition, popular upgrades such as new flooring, hardscape patio space, or a kitchen or bath upgrade are huge selling factors for renters while also boosting the properties overall ROI.
Another reason a good tenant might leave is due to changes in the current building or neighborhood status. If a tenant feels that where they live is unsafe, you can’t blame them for wanting to get out while they can.
That’s why investing in prime locations is so essential. However, if you’re already in this scenario, you could boost your building’s security by adding exterior cameras, secure keypad locks, and ensuring the doorways and paths are well lit. .
Aside from rent increases, poor maintenance response is a very common complaint for tenants. When negligent landlords are running the show, leaking pipes, persistent pests, and faulty appliances can become the norm. While your tenant has the right to take you to court for failing to carry out repairs, most opt to relocate to somewhere with a better maintenance culture.
The obvious solution to this problem is to take your rental maintenance seriously. Address renters’ complaints as soon as possible, and complete semi-annual inspections to prevent future issues. Remember, maintenance keeps tenants happy, keeps your property in good condition, and avoids costly emergency repairs.
Similar to the point above, another issue for tenants is when they have terrible communication with their landlords. It is understandably frustrating when you have a problem to report but can’t seem to get a hold of the property owner.
Landlords must not only put in place process to respond quickly, but they must communicate in a professional manner. Whether you opt for text, emails, or a property management portal, it’s fine as long as it works.
While we’re still covering negative habits that prevent tenants from renewing their lease, we have to discuss disrespectful landlords. There are many ways you make your tenants feel like you don’t value them. For instance, if you constantly use your key to get in when there’s no emergency and without notice. Not only does this violate their privacy, it’s also illegal. Also, if you consistently break your promises to repair or add an upgrade, it could send the wrong signal.
When issues do arise, landlords need to keep calm and keep emotions in check so as not to escalate the situation further. After all, a strong landlord-tenant relationship is built on trust and mutual respect.
Have you ever experienced a problematic neighbor that played music at all hours of the day, took your parking spot, or constantly found a reason to butt heads with you? If so, you know that this can make day-to-day activities in your home a stressful experience.
While tenants don’t necessarily have to be best friends with their neighbors, it does help when everyone respects one another. As a rental owner, carefully screening applicants and checking with previous landlord references is vital. This could give you a heads up that an applicant may cause trouble in your building based on their past behavior or history complaints.
Specific life changes can affect a tenant’s ability to renew their lease when it ends. For example, if they get a new job requiring a location change. In that scenario, there isn’t much a landlord can do. Alternatively, they might have to find a new place because of other circumstances like a divorce or the death of a loved one.
Every situation is different. However, if they are not moving far or if your portfolio has property in other areas, try to work with them. If not, do what you can to work together to market the property ahead of vacancy and facilitate a smooth transition.
Better Rental Options
Finally, tenants may relocate because they have found better rental options. Whether it is price, amenities, security, or other factors, sometimes renters are just looking for a change. This reason is pretty common in places where the housing market exceeds the dedmand. More options for tenants means more competition for landlords.
Thus, it would be in your best interest to keep up with the latest rental trends in your local market so your units remain in high demand.
Finding high-quality tenants is a tedious process. Therefore, keeping great tenants around should be a top priority for rental property owners. While owners cannot combat every reason a tenant chooses to leave, there are many of these top 10 reasons you can act on. That said, one of the best ways to manage building needs, find new tenants, and keep the good ones you have is to work with a professional property management firm. Thus, if you have one property or 100, don’t hesitate to reach out for help.