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Tenant Duration – How do you keep long-term tenants?

July 28, 2012

We just passed a cool milestone on our properties. For those we have owned over a year, we have had 100% occupancy for the last year. It’s a small sample, but it’s still nice. Property 7 was a purchase from earlier this year – so they have not been there a year yet.   

My goal is to get at least 2.5 years out of each tenant. If I can get around 30 months – then I feel really good. Anything more than this and you are doing great. I was thinking about what allows you to keep long-term tenants. I think for us it’s a couple of things.

  • Set  our rent slightly below market. Coming in slightly below market keeps them from shopping around and insures your properties rent quickly when they do become vacant.
  • We are responsive to maintenance issues. Responding right away should keep them content and it’s just good business practice.
  • We self manage our properties.  In addition to having more control over our properties, I think this is just more personal and helps to retain longer term tenants. 
  • We screen our tenants thoroughly. We require an application and we check them out thoroughly.  Especially their employment, current landlord, and previous landlord.
  • Incent them properly. If we like the tenant, then we try and get them to stay. If they are determined to leave, then we try and get them to find our next tenant, clean out the place thoroughly, cooperate with us to help show the place, etc.

How do you judge who is going to make a good tenant?  This is tough and I don’t have some magic formula. First everyone fills out an application and I check everything out thoroughly. But, for me it’s just a sense I get when talking to prospects. When I get down to my final candidates I really start interrogating. If their income to rent ratio is tight, then I just come out and ask them the tough questions. I would rather just go ahead and scare them off right now than put someone in there that I might have to evict later. I like to try and drive by where they currently live to see how they keep up their current place.

So here is our Report Card. I feel good about these stats, but would like to hear about how others are doing? You can read more details of each property on the ‘Property’ page. I am probably jinxing us by posting this and we will have 3 unexpected vacancies next month….

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From → Landlord

4 Comments
  1. That is awesome! 30 months you should make a lot of money. If you can also turn them in under 30 days you will make a lot of money too. Great job!

  2. yeah..at 30 months I am loving life. When I buy I typically assume only 11 months of revenue per year in my purchase formulas. We are exceeding that by far for now. I do have one property that I am dreading when they move – big family that is rough on the house for sure. Hopefully they will stay for a while…

    Thanks for your comment.

  3. You have a great procedure for screening tenants. I’m curious, what types of things do you do to try to get your good tenants them to stay longer?

  4. Terry,

    Since i already price slightly below market, usually dropping the rent to keep a tenant is not a viable option. However, this depends on the condition of the place and the time of year, I might still try and drop the rent if I think it will work. Some tenants are smart and they just like to fish a little bit around the lease renewals – so I have to be careful.

    The key is to stay in communication with them and find that first hint they are looking. My favorite technique is to try and get them to stay through the winter if its in October or something. I tell them things like I know your lease is due in November, but I will keep the rent where it’s at and you just provide me with notice well before you plan to move. I tell them to think about waiting till school is out and they should have more properties to choose from. Sometimes this is enough to get them thinking….

    But many times, the move is out of my control – job change or whatever. So I just try and get them to work with me on cleaning out the place, and preparing to get it rented again. One technique that really works is to tell them that I typically wait 30 days to return the deposit per the lease agreement, but if you guys clean and sweep everything out, take all furtniture and belongings out, and allow me to show the house, then I can return the deposit upon the move out inspection. (something I would probably do anyways, but this puts a little incentive into it)

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