Smart landlords understand how important lease renewals are to their portfolios. Recent data shows that over two-thirds of all lease contracts are renewed annually. This figure is a strong number.
Consider the environmental, sociological, and economic factors influencing these decisions.
Approximately 63% of renters choose to stay because moving to a new apartment is often too expensive. If renters feel they're living in a recession, they're less likely to move.
High competition for apartments can also influence renters to stay where they are.
As a landlord, there are more things you can do to incentivize your best tenants to renew. The ROI on responsible, long-term tenants is a game-changer.
Here are three tenant retention strategies for your portfolio management.
1. Define Your Ideal Tenant
Capturing a tenant with a great ROI starts with the right tenant placement strategy. Start thinking of this task as a marketing strategy.
Every marketing strategy needs an ideal consumer profile to build marketing materials around. In the rental real estate world, it's called an "ideal tenant profile."
Start by defining the data points of your ideal tenant.
Suppose, you're renting out an apartment for $2,000 per month.
You'll want a tenant who can:
- Easily pay that amount
- Cover their security deposit
- Have enough funds to pay subsequent months
Thus, you would include this information in your ideal tenant profile and approximate an annual income from this data. Flesh out your profile with actual occupations and credit scores. The ideal tenant would also have a strong rental payment history.
2. Tenant Screening and Lease Renewals
The above points speak to the importance of a robust screening process. At this stage, it's time to get expert property management advice about gathering accurate data.
For example, the property managers at Rental Zebra check official records for eviction data, criminal history, and government ID verification. They call past and current employers to verify employment. They'll even call previous landlords to learn more about applicant's renting behaviors; this includes rent payment habits.
The process begins with your rental marketing campaign. You can filter out ineligible candidates by being clear about your expectations in marketing materials. This process also includes your rental application.
3. Customize Lease Agreement Renewal Contracts
Next, gather feedback from your tenants to customize effective lease renewal contracts.
If it's a renter's market, they're more likely to leave if they find an alternative with a lower monthly rate. Should this be the case, offer a discount on the first month's rent.
The condition of your property also influences lease renewal decisions.
Make sure you're maintaining the property regularly to avoid tenant turnover. You need a reliable and professional property maintenance solution. A property management company can handle these tasks and forge connections with local vendors to service repairs and emergency requests.
Remember These Lease Renewal Tips
Don't leave lease renewals until the end. Make sure it's a part of the process from the very start.
Think more about the value of an ideal tenant profile, better screening, and renewal incentives.
The team at Rental Zebra is a family of industry experts experienced in complex problem-solving. We're here to help you navigate the challenges of rental properties to optimize your profit strategy.
Schedule your free consultation or contact us to learn more about your options.
