Even in a tight rental market — with virtually no vacancies — landlords still stand to lose money. That’s because low tenant satisfaction leads to time wasted and money lost. Well-managed tenants generate fewer management headaches and higher property values.
Income loss from low tenant retention occurs slowly, over time. Fortunately, it can be prevented. Take a moment to see if you are making these mistakes:
1. Not encouraging the best tenants
Are you spending all your time on problem tenants? That means you’re not paying attention to the right ones.
It’s one thing to find good tenants. It’s another to keep them happy. The benefits: more tenant referrals, less time managing, and more time to do the things you’d rather be doing.
If you feel you spend too much time putting out fires, try:
Signing up to Report Rent Payments. This service benefits good tenants by allowing them to build and maintain good credit, and to leave with a Certificate of Satisfactory Tenancy to show the next landlord. With vacancies so low, that Certificate can make all the difference in securing the next rental home;
Thanking tenants each month they pay rent on time;
Running tenant background checks on new occupants so current tenants feel safe;
Responding quickly to requests for repairs or complaints; and,
Making tenants feel they are part of a community.
2. Not looking at the end game
For a rental property business to reach peak performance, landlords need to be in it for the long haul. Healthy cash flow is the immediate gain, but often, the ultimately goal is to sell the property at a profit. To do that, rental history is crucial. Each tenant history is like a grade on a report card. One bad tenant can lower the average.
Along with striving to maintain tenant retention, maintain tenant files to demonstrate active engagement with tenants. Stellar tenants add value when the property goes on the market. Unfortunately, the opposite also is true.
3. Ignoring maintenance/cheap appliances
One of the easiest ways to chase away good tenants is to postpone needed repairs or updates. For instance, waiting to replace appliances until the old ones blow up — literally — will destroy goodwill, and eventually injure the landlord’s reputation.
Tenants who are out of hot water or laundry service for any length of time due to shoddy appliances will move on. Tenants may be entitled to withhold portions of the rent. That doesn’t look good on the score card. Considering the potential loss of value and reputation, it’s simply not worth the savings to scrimp on appliances and other amenities.
Once a property’s reputation becomes tarnished, the better tenants stay away. What’s the landlord left with? Bad properties attract bad tenants.
4. Forcing tenants to fend for themselves
Some landlords find it convenient to ask tenants to manage themselves. Stepping away from the duty to resolve tenant disputes can prove catastrophic.
Forcing tenants to confront a neighbour or stranger at the property seldom ends well. Disputes can escalate, impacting more tenants, and there is the risk of physical injury.
Bringing in the police is not the answer, either. Those police visits don’t go unnoticed by adjacent property owners, who might complain. If the property is deemed a nuisance by local ordinances, that will seriously diminish its value. Potential buyers can access previous police reports, and that might attract investors looking to pick up a bargain on an under-performing property.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
