November 13, 2018
Your Guide to Renewing Leases Without Losing Tenants
Wouldn’t it be great if you never had to worry about leases expiring and tenants moving out? You know how much it costs when a unit sits empty for a month or two in-between tenancies. Then, factor in the expense of a fresh coat of paint, the general expenses of the unit that still need to be paid (heat, mowing the lawn, etc.) advertising costs for the vacant unit and the admin time of showing it to prospects. Hanging onto your good tenants is a smart way to ensure cash flow, and keep your business humming along.
While there’s no way to eliminate turnover completely, you can play a strong role in reducing it. To succeed in today’s competitive marketplace, property management firms must continually look for ways to keep renters happy. In short, they need to create a system that maximizes lease renewals.
Start from Day 1
Always deliver on customer experience, beginning from Day 1. Be sure to check in with the tenant during and after move-in, to make sure they have everything they need. Keep in touch periodically, either with a customer survey or a birthday or holiday greeting. By building relationships, you increase the likelihood of renewals.
Knowledge is Power: Get a Heads-Up
Knowing who is considering moving is invaluable information. Anywhere from 120 to 90 days prior to the end of the lease, property managers should get in touch with the tenant to thank them for being a tenant and letting them know the lease ends on X date. The more insights you have into who is staying and who is going, the more you can start to either negotiate a lease renewal concession. If someone wants to downsize or a family needs to add a bedroom, you can then look to see if you can accommodate this in a different unit in your property portfolio.
Leverage Your Amenities
You can use event rooms, guest suites and common areas as sweeteners for the renewal discussion. When you can dangle a free use of the party room, a free month of parking, or the use of the guest suite for a weekend for out-of-town visitors, it can be a powerful bonus for their loyalty.
Invest in Asset Upgrades
Another way to provide immediate value to your best tenants is to do an in-unit upgrade. It’s an ideal way to invest in capital improvements while making your tenants happy. Consider upgrading appliances, kitchen countertops or bathrooms. There are endless opportunities to create these win-win scenarios.
Small Tokens of Appreciation
Sometimes something as simple as a $20 gift card at a local coffee shop, or a $50 Visa gift card, can go a long way in encouraging tenants to renew their lease. We’ve seen some property firms use a free TV as an incentive, and this can come out of a marketing budget.
Make Life Easier for the Tenant
Modernizing how you do business can make it your property more enticing, and drive up renewals in the process. Offer alternate ways to pay rent, such as credit cards and being able to pay the rent online. Make it easy to submit a maintenance request, without your tenant ever having to pick up the phone. Upgrade your technology to make life more convenient for your residents.
Offer Lease Renewal Concessions
Do you offer a bonus or concession for renewing the lease? Lease renewal concessions can be a highly successful way to retain your best renters. Considering the costs of turnover, offering an incentive to stay can be better for your pocketbook than trying to find a new tenant. You might want to offer a free month of rent if the tenant signs a new 13-month lease.
Rents have to go up from time to time to keep up to market value. However, with your high-quality tenants you may wish to offer the concession of a reduced increase. Let them know that you can offer then a discounted increase for lease renewal. So, instead of a 4% increase in monthly rent, if they renew 60-90 days before the end of the lease, you can offer them a reduced increase of 2.5%.
Release the Security Deposit
This can work well with longer-term, responsible renters who respect their unit and pay their rent on time. Returning their initial security deposit in instalments, or use it to reduce the rent.
How Property Vista Helps
At Property Vista, our property management software is designed to help you manage your lease renewals easier, offer enhanced payment options to your residents and increase the efficiency of your operation. From tenant portals or owner portals, we deliver ways to improve communication and automate. If you are looking for modern property management software, check out our pricing and request a demo.