Very few of our tenants choose to renew their leases. What could we do to increase tenant retention?
There can be many factors that influence a tenant’s decision to stay in place or move. A tenant may need to move for personal reasons, e.g., family, health issues, job relocation, or changes in income.
Generally there are three key factors that influence the tenant’s decision to renew:
- Local market conditions
- Physical condition of the rental unit and rental property
- Property management and rental policies
A landlord must stay current with local market conditions. Without market knowledge, a landlord has no idea if his business is competitive, or could be competitive with additions or adjustments to his business plan.
In conducting market analysis, a landlord will need to compare his properties with comparable local area properties for rents, amenities, rental policies.
Deferred maintenance or requests for maintenance that are ignored can be a major motivation for tenants to move. An objective assessment of the physical conditions of the rental property to identify needed repairs and improvements followed by subsequent action to implement needed changes could have a positive influence on renewal decisions.
Good property management and customer service can be a significant factor in attracting tenants and retaining tenants. Good communications between management and tenants and prompt responses to questions and requests can keep tenants satisfied during the current tenancy and increase the likelihood of renewal.
Tenant screening, as a core practice in good property management, also can have an impact on a tenant’s decision to renew a lease. Good tenants want to stay in good properties. They want to be sure that the management continues to screen for more good tenants. Tenant retention has been shown to be higher in properties where landlords conduct complete and comprehensive screenings for selection.
Enforcement of rental terms and conditions is another way that landlords can attract and retain good tenants. Good tenants leave when a landlord does not enforce his rental policies allowing lease defaults, dangerous conditions or illegal activities to occur on the rental property.
To improve tenant retention and maintain a satisfactory market position, the more tenant feedback that can be obtained, the more a landlord can improve his position in the marketplace. As an example, an exit interview or move-out survey of departing tenants is a marketing research tool that can provide valuable information on the tenant’s reason for moving and suggestion for improved tenant services.