Landlord’s Guide to Tenant Retention

So you went through the tedious tenant screening process, checked credit scores, called references, and now have great tenants in place. Keep them! New tenants are an uncertainty, and tenant turnover is costly. According to Real Property Management Express, “Whenever a tenant leaves a property, making the property rent ready and finding another qualified tenant costs money. The national average cost of a turnover is equal to three months' rent not including the lost rent during the vacancy.”

Further, in their Property Manager's Guide to Tenant Retention, ButterflyMX states that 60% of all tenant turnover is controllable. Keep reading to learn how easy it is to implement a tenant retention strategy. While life happens and people move on, this post is sure to keep your tenants happy and wanting to stay. 

What is a tenant retention strategy?

A good starting point is understanding what a tenant retention strategy means. A tenant retention strategy refers to a set of practices and initiatives implemented by landlords or property management companies to encourage existing tenants to renew their leases and continue occupying a rental property. The goal is to minimize tenant turnover and maintain high occupancy rates, which is beneficial for both financial stability and operational efficiency. Here's how.

Tips for Tenant Satisfaction

Here are some ways to increase tenant satisfaction from tenant screening to day-to-day property management. We'll get into lease renewals and best practices in the next section.

Start the Lease Off on the Right Foot

Property owners have an opportunity to put their best foot forward the moment the lease is signed. Moving is often considered one of the top life stressors — right next to divorce, the death of a loved one, starting a new job, and getting married. As a landlord or property manager, you have an opportunity to ease the stress of a move by providing your tenants with helpful information about the neighborhood that will reduce stress on day one. Providing this information will further establish your credibility and be an initial step toward tenant retention.

We recommend putting together a tenant welcome package that includes:

Property-Related Information: 

Provide tenants with important phone numbers, processes for maintenance and rent payment, and any other key details they need to know., such as:  Answer questions that you anticipate getting. Here are some ideas: 

• Trash Day Details: Do not tell your tenants in the middle of a move to ask a neighbor for information on trash day. Additionally, many trash services will not take excess trash, so give your tenants that information.
• Trash Day Details: This is particularly important if your rental's neighborhood has cluster mailboxes. Nobody wants to be in the middle of a move and trying every single cluster mailbox to see if the key you provided them with works. Tenants also generally would prefer to avoid a trip to the post office when they are still getting settled.

The utility providers and contact information:

Particularly if the tenant is responsible for paying utilities, do not make them jump through holes to find out who the provider is and how to contact them. It's also mutually beneficial for both parties to provide utility transfer instructions.

Area Related Information:

Tenants who are new to the area will love to know about local restaurants, movie theaters, parks, and any other recommendations in  the neighborhood. Get creative and put in take-out menus, coupons, or even a TV guide to help the new tenants feel more settled.

Welcome Gifts: 

This doesn't have to be a large expense. Here are some small gestures that can go a long way:

• Branded Gifts: Do a little business marketing here. Put a few pens or a mug with your logo on it. These items can be inexpensive and can benefit your business.
• Things They Need: Give them toilet paper or cleaning supplies to start off.

• Food Gifts: Provide a box of chocolates or some cookies from a local baker.

Prioritize Customer Experience Throughout the Lease

“As a property manager, it's important to take stock in your customer experience to make sure you're not just meeting your prospects and residents' needs, but exceeding them if you want to stay competitive,” says Brittany Benz of AppFolio. Benz further notes: “Customer service and loyalty plays a large role in a businesses' success — across all industries.” Use these tips to create an optimal tenant experience:

Understand Tenant Needs:

A critical part of a tenant strategy is understanding and addressing the needs of tenants. Regularly engage with tenants and gather tenant feedback, whether through surveys or by phone. By actively listening and responding to their needs, property managers can develop tailored solutions and improve overall tenant satisfaction. 

An important piece to note is that retaining tenants is not a one-size fits all approach. Our 2023 tenant survey revealed that tenant preferences vary by generation. If you don't know your tenant preference, tenant feedback can be invaluable.

Prioritize Maintenance:

Well-maintained properties create a positive living environment and contribute to tenant satisfaction. Implementing a proactive regular maintenance program, conducting ongoing inspections, and promptly addressing maintenance requests are essential for preserving property quality. Additionally, investing in upgrades and amenities that align with tenant preferences, such as energy-efficient appliances or communal spaces, can significantly enhance tenant retention.

Establish Clear Communication:

Open and transparent communication channels foster trust and contribute to tenant satisfaction. Regularly updating tenants on property-related news, policies, and any upcoming changes through multiple platforms, including email, newsletters, or online portals, helps them stay informed and engaged. Promptly addressing tenant inquiries and concerns demonstrates responsiveness and a commitment to their well-being. Address maintenance issues as soon as possible, and if there is a hold up, communicate it. Give them a reasonable timeframe of when their maintenance request will be addressed, and let them know that you are on top of it.

Establishing strong tenant communication upfront also encourages tenants to reciprocate. For example, good tenants will communicate with you if they need to pay rent late.

Demonstrate Small Acts of Appreciation:

We already talked about starting off the lease with a welcome kit, but don't end it there. Tenants want to feel appreciated for being great tenants. Send them a holiday card during Christmas time, bring them doughnuts on National Doughnut Day, or simply randomly swing by with cookies. These small, inexpensive gestures will mean a lot and make tenants feel more at home.

Go Digital:

In our January 2023 tenant survey, we polled 1,752 U.S. adults who currently live in a single-family long-term rental home. Interestingly, half of survey respondents said the a digital way to pay their rent is so important. An online tenant portal will not only help process rent payments, but also help with communication and maintenance requests.

Some of the top polled reasons for moving, including a negative interaction and unresolved maintenance, are preventable

Make the Lease Renewal Process Seamless

Tenants stay or move for various reasons that are out of your control. Here let's focus on what you can do during the lease renewal process to help sway a tenant's decision.

Have Lease Renewal Incentives

If your current tenants are deciding between leaving and staying, offering incentives could influence them to stay. These incentives don't have to be big or expensive. A mutually beneficial idea is to do some minor property upgrades, such as adding:

• LED Light Bulbs
• Smart Locks
• Security Cameras
• Smart Home Devices
• Spa Shower Heads

Communicate Any Rent Increases As Soon As Possible

Our 2023 tenant survey revealed that in the event of a rent increase, tenants prefer 30 days notice or more. Tenants who were given LESS than 30 days notice about a rise in rental rates during their lease renewal process in 2022 were 180% more likely to be dissatisfied with the process than those who were given more notice.

A Look at 2022 Tenant Retention Rates

A good way to gauge your tenant retention rate and strategy is to look at whether last year's tenants renewed their lease. Here is some data from our 2023 tenant survey on lease renewals. The majority of U.S. Adults who rent their home (66%) rewed their leases in 2022. Further 78% of tenants were satisfied with their lease renewal. Aim to get at least 60% of current tenants to renew their lease. 

The Right Tenants Make Or Break A Successful Real Estate Investment

Your monthly  rental income is the key to maintaining positive cash flow, so do your part to keep your quality tenants in place and avoid costly vacancies and turnover. Implementing a comprehensive tenant retention strategy is a worthwhile investment for landlords and property managers. By understanding tenant needs, offering competitive rental terms, maintaining property quality, establishing clear communication channels, fostering a sense of community, recognizing tenant loyalty, and continuously improving, property owners can significantly increase tenant happiness, increase tenant retention rates, and create a stable and thriving rental property. Prioritizing tenant retention not only yields financial benefits but also strengthens landlord-tenant relationships, leading to long-term success for your rental properties.

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