So many articles for landlords focus on how to manage or get rid of bad tenants, but what about when your tenants are so good that you never want them to leave? From paying on time to taking pride in the property, tenants who abide by the lease agreement and go the extra mile are hard to find. A good tenant can make a huge difference in your day-to-day life as a landlord, and they’re worth keeping around.
When you’ve got a rental unit occupied by excellent tenants, consider providing enticing rental incentives so that they won’t even consider looking elsewhere to rent. Renewal incentives can help you and your tenant reach both of your goals—they get a nice, secure place to live and you get an occupied property with excellent tenants for another year.
Retaining Good Tenants Makes Financial Sense
Any successful business manager will tell you that it’s easier and more cost effective to keep the customers you have versus trying to gain new ones. Besides figuring the lost income you factor in all the costs for advertising, tenant screening, cleaning, painting and so forth to transfer a property from one tenant to another, it’s pretty obvious that it is much more cost effective to keep current tenants in place and simply sign a new lease agreement.
Recognize the Value of Good Tenants
Sometimes the best way to recognize the value of good tenants is to compare them to how much bad tenants can cost you in time and money. Bad tenants can lead to a host of problems that drain your finances and waste your time.
Here is a list of just a few scenarios that can be caused by bad tenants:
- Late rent payments, partial rent payments and bounced checks
- Constant repairs for misuse of appliances
- Over the top demands of your time and resources
- Noise complaints from neighbors
- Inability or unwillingness to control guests
- Damaged property
- Violating the lease agreement
- Unwilling to comply with official notices
- Theft or other criminal activity
- Refusal to vacate rental property
- Lengthy, costly eviction process
Good tenants in your rental property will respect you and your position as landlord, honor their responsibilities as outlined in the lease agreement and understand that it’s in their best interest to make the relationship mutually beneficial.
Ideas for Renewal Incentives
As the expiration for the lease agreement approaches, connect with your tenants to see what their plans are regarding renewal. If they inform you that they are interested in renewing, make sure to seal the deal with a renewal incentive. If the tenants aren’t sure yet about renewing, offer a renewal incentive. Either way, you are rewarding your good tenants for staying, and therefore rewarding yourself with another year of landlord happiness.
Ask Tenants What They Want
Rather than surprise the tenants with something that doesn’t mean much to them, ask them directly what it would take to get them to renew. Gifts, cash or discounts, and property upgrades are the most common renewal incentives. Let your tenants tell you what they’d prefer, then negotiate from there.
Whether you choose a physical gift or a gift card, this is a popular type of renewal incentive because it provides the tenants something they wouldn’t normally buy for themselves. Ideas include flat screen TVs or other electronics, sports tickets, annual pass to a local attraction like an amusement park, new furniture, a weekend getaway or a new game system. The cost of the gift will be well worth it to keep those good tenants for the next year.
Cash or Discounts
Financial incentives appeal to most people, so offer your tenant the option to reduce expenses in exchange for a renewal. Ideas include reducing the rent, offer one month rent-free, a lease renewal cash bonus or paying one of the utilities for a year. Tenants who might be shopping around for a new place are often more willing to stay put for the best deal.
Benefitting both you and the tenant, property improvements include any upgrade that is permanent to the unit. Ideas include new paint, new flooring or carpeting, new appliances, covered parking, or a remodeled bathroom. If your rental property is furnished, consider new furniture that will stay put when the tenant eventually moves out. Property upgrades of all types boost your investment’s value and tenants get to enjoy the nicer surroundings.
Tenant Retention Benefits Landlords
Finding new tenants will cost you time and money, and then there’s no guarantee that the new tenants will be as good to you and your property as the current ones. Offering incentives is an excellent way to encourage your good tenants to renew with you and is part of your ongoing commitment to be an attentive landlord who rewards tenants that make investing in real estate worthwhile.
Do you offer renewal incentives for good tenants? What works for you in this area?