Reducing the amount of tenant turnover for a landlord is a critical component of owning a property and capitalizing fully on its financial potential.
The more turnover there is in a rental property, the more costs are incurred in setting up that now vacant space to rent out to new tenants, and of course the less profit is being made.
By cutting back on the number of tenants turning over on a rental unit, it reduces the amount of improvements that have to be made to the units. The longer tenants stay in a rental unit the more improvements will need to be done for that new tenant coming in.
And all those little things add up – from cleaning to repairs.
Typically, on average, tenant turnover is 20 and 30 per cent every year. In a larger building, for example, those costs are going to add up substantially.
On top of that, there’s the costs involved in finding a new tenant. That could include marketing expenses or a management company will have to spend time and resources seeking out someone to occupy that vacant space.
Faced with this reality, landlords have to really think about ways to keep their tenants happy.
In general, what makes tenants happy are clean and safe living environments.
Landlords have to ensure that their buildings are well-maintained, that they’re well-lit, the common areas are clean and taken care of on a regular basis. If it’s a bigger building, then security measures become important as well.
Prompt and quality service also become critical. When there’s a request by a tenant for the property owner to deal with an issue, it has to be addressed in a timely manner with the perception from the tenant that the landlord is dealing with the issue in a reasonable way.
If it involves an older building with perhaps ventilation issues, the heat doesn’t work and in general it’s just a crappy building, those buildings not surprisingly have higher turnover rates.
But in a nicer, newer building that’s well-run, clean, safe, with good property management, and the landlord is responsive to the tenants when they need something, tenants will stay longer. There are less reasons to move.
Tenants always have different reasons for moving. Sometimes it’s cost. Sometimes it’s a move to another part of the city or even outside the city they are living in. And sometimes it’s the appeal of homeownership.
Those are reasons out of a landlord’s control and really nothing that a property owner can do about it. But the key is to take charge of the things they can control.
Amenities also play an effective role in keeping tenant turnover down to a reasonable level. The more amenities available to a tenant that makes their life easier and enjoyable, the more likely it is that the tenant will stay in their rental home for a longer period of time.
Reducing tenant turnover should be a major strategic objective for landlords and property owners. It just makes good economic and business sense.
Chris Chornohos has a passion for real estate and helping his clients reach their business goals by providing Real Estate Investors and Owners with the first class valuation and advisory services to close more deals. Chris is also an investor, builder and developer. Reach out to Chris today to help with your Real Estate needs.