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How to Keep Good Tenants and Manage Move-Outs
Property management companies and landlords know that dealing with tenant turnover can be expensive and risky. What if you can’t quickly find a qualified candidate for your rental property? Add to that the time and energy it takes to clean the rental unit or rental home and a few days can quickly turn into a month without a tenant. To avoid those costly vacancies, it pays to groom your current tenants and work with them so you’re meeting their needs while they help pay down your investment. Here are some pro tips to help you save money and continue towards your financial goals. And in doing so you’ll learn how to keep good tenants.
Tips for Keeping Your Best Tenants
Just like any other business relationship, it’s important to keep your tenants happy throughout the year. By working with your tenants on issues that are important to them, and responding to their inquiries in a prompt and professional manner, you’re likely to gain good landlord points that may encourage them to stay in the long run.
Add value to the rental by making it “one of a kind”. Going above and beyond to create a unique space for your tenant can really set it apart from the competition. Installing a custom closet in the bedroom or upgrading the bathroom amenities with an over-head shower and heated towel bar are good examples of great additions. If you’ve got a single family home, try converting some lawn space into a garden. Property owners can build tenant loyalty with benefits like these. Tenants will remember these features when it’s time to renew the lease
Setting Expectations for Current Tenants With Showings
In order to streamline turnover and keep the time your rental is vacant to a minimum, you’re going to need to come to an agreement with your tenant on your expectations when it’s time to show the space. Work with your real estate attorney to build terms into your lease agreement that match your needs and help to ensure the rental’s clean, tidy and carefully insured when showings are scheduled.
There’s a lot you can do that can help assure your showing goes smoothly. Building your lease to reflect your goals for showing the space is one way. Include terms on notification, duration and how you expect the place to be cleaned.
Showing a space is a great time for in-person tenant screening, because you’ll answer questions. Meeting prospective tenants also gives you the chance to observe how they operate when showing the space. Are they being up-front and honest, were they on time? These are important indicators to consider. Think of your prospective tenant as a candidate, and you’re performing a job interview. Would you hire this person to work for you? If you wouldn’t, that may help to inform your decision.
The Pros and Cons of Showing a Vacant Unit
With no tenant in the rental you’ll have time to redecorate and upgrade the space. That’s a big benefit. But the downside is that it comes at a cost. You’ll lose valuable rental income every day the space is vacant. If a small loss in rental income is no big deal, and you’re looking to produce a well-crafted showing for your potential tenants, this may be the way to go.
By letting the tenant see the space empty, they may be able to better visualize their belongings in your space — and that just might seal the deal on signing a great tenant.
How to Increase the Rent upon Lease Renewal
Raising the rent with each new tenant seems like a great idea, but there are a number of important facts to keep in mind. You’ve got to work in accordance with laws that dictate how much rent can be raised annually. You’ve also got to keep the price of your rental competitive — if you raise it too high, too quickly — you might have trouble finding a tenant. By working a few clauses into your lease agreement that define the terms around how and when rent will be raised, your tenant will be aware that an increase is on the horizon upon lease renewal.
Retain tenants by pushing for long-term leases upon renewal. One way to build tenant loyalty is by encouraging your tenant to sign a longer lease. Offer incentives for a longer lease like a reduced rent rate. If your tenant prefers a shorter lease, let them know that the rental price will increase.
The Importance of a Move-Out Letter
Your lease is an important tool to leverage when it comes to renewals and notice of intent to vacate. By clearly stating your requirements for a move-out letter in the lease agreement — delivered in a timely fashion by the tenant to you — you can help protect yourself from costly vacancies. When fines are imposed for late submissions, you’ll be able to cover some of the out-of-pocket mortgage expenses while your rental property is vacant. Our pointed advice on how to get your tenant to honor their obligations can save headaches during this critical period.
Stay ahead of move out deadlines by setting reminders in your calendar. Send a letter notifying the tenant that a critical move-out date is approaching well in advance of the end of the lease. Remind them of the fine or other fee they may incur if no response is received. Once the security deposit is at risk, you may find your tenant jumps into action and responds more promptly.
The Cleaning Checklist and Your Tenant’s Exit
Define your terms about your expectations upon move out, and your tenant will know how to leave your place in an acceptable state. Again, lean on the lease and put these specifics in your agreement and you’ll find the tenants have the information they need to help ensure the return of their security deposit. Some property managers find it useful to add an addendum to the lease that contains a cleaning checklist, further keeping expectations transparent and easy to find. By attaching the checklist to the request for a renewal decision, you can remind your tenant of their obligations as they move through the renewal period.
Managing Security Deposits
Because leases are legal documents, and dealing with security deposits means working in accordance with state and local laws, you should have a real estate attorney validate the terms in your lease agreement. Use simple language to define your terms, and review these items with the tenant when the time comes to sign the lease. They’ll be more aware of their responsibilities and will know how to refute claims made against their security deposit. Make dealing with security deposits a breeze by sharing the results of your pre-inspection report before the tenant takes occupancy and study up on how to handle disputes so you’ll be prepared if a tenant should ever disagree with your claims.
Why Does the Tenant Get an Opportunity to Refute?
According to state and local laws, tenants have the right to refute claims for damages made by landlords and property managers. This provision in the law allows them a means to fight unjustified claims. Just as you’ve documented issues and damage, they’ll need to present evidence that contradicts your findings. Given that the property damage extends beyond normal wear and tear, the tenant is allowed to file a formal complaint and attempt to refute the damage.
Carefully photograph the space before each tenant occupies the space. Email the tenant a copy of these images and request that they return the property in like condition, minus normal wear and tear. Doing so helps them realize that their security deposit may be at risk if they don’t take care of your rental.
Tenant Renewals and Updating Your Landlords Insurance
When renewal season rolls around, remember to review your landlord insurance policy with your American Family Insurance agent to be sure you’re getting the coverage you need. If you’ve made improvements or changes to your property — specifically if those adjustments have increased the resale value of your real estate — updating your insurance can really help to protect your finances.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal advice. You should contact an attorney for legal advice specific to your situation.