Many Property owners have been backed into the role of reluctant landlord in recent years, opting to hold their properties as rentals until the prospects of selling real estate improve. In the present landscape, landlords who have an existing relationship with a tenant who has proven his or herself both fiscally reliable and personally responsible count themselves lucky. Don’t get caught in the trap of taking a good tenant for granted. Below are some ways to encourage a favorable tenant to consider extending or re-signing their lease agreement.
Keep tabs on the overall vacancy rate in the area surrounding your rental property (not simply the immediate neighborhood). Maintain a strong knowledge of rent rates in the area, and of any seasonal rental trends that may be pushing rent up or down. When checking rental rates, don’t simply compare rent between your property and rentals of comparable size or amenity. You want to have a clear picture of what other properties are available on the market. For example, are there larger or more elaborate rentals listed just above your property’s rate that may tempt your current tenants? Are smaller rentals going at steep bargains, potentially swaying your renters to downsize?
While most renters don’t want the hassle of an overly nosy landlord (or perish the thought, a landlord who tries to act buddy-buddy with their tenants), tenants will generally appreciate a landlord who periodically checks in to see how things are going. Email is a convenient way to touch base with your tenants and is less intrusive than a phone call (never show up in person unannounced). Consider sending your tenant(s) an informal email message every six to eight weeks or so: anything more frequent runs the risk of becoming an annoyance, while checking in only a few times a year is not especially useful for either party.
Keep the tone of these messages friendly, asking if the tenant has had any problems with the unit or needs to suggest any needed or upcoming repairs. By positioning yourself as a helpful owner looking out for the occupant’s needs, you will help strengthen the landlord-tenant relationship. If nothing else, a tenant who views you as more than just a bill collector is more likely to give you additional notice if they have decided to move out.
Conventional wisdom tells a landlord to charge market value for rent. But when contemplating a future rent increase, consider whether you are willing to risk losing your current tenant for that potential bump in rent. If your current tenant isn’t willing to pay the increased rent, putting the rental back on the market entails built-in costs (cleaning or painting not covered in the damage deposit/rental agreement, plus the inevitable turnaround time that will leave the property vacant). You run the risk of having the property remain vacant for long stretches of time. At best, you may end up renting to a less responsible tenant who causes damage to the property or does not pay rent on time.
Simply put, now is likely not the time to increase rent based on motives of increased profit. If you must increase rent for legitimate reasons related to the property (skyrocketing property tax, for example), do your best to keep the rent increases minimal and provide your current tenant with as much information on why you are making the change as is possible (or prudent).
On the flipside, if you are able to keep the rent at the current rate or are in a position to lower rent to match current market rates (based on all that research you’re doing to stay current on rental trends…), make sure to call your altruism to your tenant’s attention. To many renters, not having to pay an increase in rent year after year is refreshing. Having rent lowered may feel like a small miracle in their eyes.
Be prepared for potential problems by keeping a list of recommended repair companies and contractors in the area. Treat all reported issues seriously and communicate frequently with your tenant to fully understand the problem. Most importantly, prove your thoroughness by following up with both the repair crew and your tenant after the problem has been resolved.
As a landlord, you can’t reasonably expect a tenant to put up with any changes or improvements that require major construction or losing use of a room/area for any significant amount of time. But many improvements and enhancements can be made in the period of a single workday with minimal disruption. For example, with the help of a good installer, a kitchen appliance or dishwasher can be replaced while your tenants are at work. Smaller-scale upgrades, such as changing out the hardware in a kitchen or bathroom(s), can also go a long way in improving the atmosphere for your renters. If you’ve established good communication with your renters, you may even consider asking them which areas of the home or appliances they feel need improvement.
Incentives don’t necessarily have to be of a monetary nature, however. If your tenants would be interested, you might consider allowing pets in the property (with or without an additional cleaning deposit) if you did not permit them previously. Another option would be to allow tenants to re-paint the interior walls and/or exterior of the home – even going so far as to help furnish paint and supplies. These non-cash incentives can help increase your renter’s sense of connection to the property.
The article is taken from one of our recent Newsletters that was e-mailed to all registered subscribers, via our RE/MAX of New Jersey web site.
Visit my web site for real estate services and support: LawrenceYerkes.com [NJ/PA]
and visit Besthomes-NJ.com to find the latest New Jersey Real Estate property listings (Residential, Commercial, Multi-Family, Farm, Land).
Know the Area Rental Market
Many landlords who have Current Tenants don’t keep abreast of current rental trends in the area surrounding your rental property. Often, property owners won’t begin surveying the local rental market until after their tenants have already given notice that they won’t be renewing the lease – in which case it may already be too late to keep that tenant. Rather than being forced to react, take the initiative and begin studying local rental trends – even if your tenants have months and months left on the lease.Keep tabs on the overall vacancy rate in the area surrounding your rental property (not simply the immediate neighborhood). Maintain a strong knowledge of rent rates in the area, and of any seasonal rental trends that may be pushing rent up or down. When checking rental rates, don’t simply compare rent between your property and rentals of comparable size or amenity. You want to have a clear picture of what other properties are available on the market. For example, are there larger or more elaborate rentals listed just above your property’s rate that may tempt your current tenants? Are smaller rentals going at steep bargains, potentially swaying your renters to downsize?
Communicate and Strengthen Relationships with Your Tenant
Too often the only interaction a landlord will have with their tenant is during some transactional stage (initial property walk-through, lease signing, move-out inspection, etc.) or when a maintenance/emergency issue arises. This passivity can easily lead to a disconnect between the two parties, as each begins to see each other as just different lines on the monthly rent check. That kind of transactional relationship isn’t likely to inspire your tenant with any particular partiality towards you (any more than they would have, say, for their local utility company), and at the same time lends you no insight into the occupants needs or future plans.While most renters don’t want the hassle of an overly nosy landlord (or perish the thought, a landlord who tries to act buddy-buddy with their tenants), tenants will generally appreciate a landlord who periodically checks in to see how things are going. Email is a convenient way to touch base with your tenants and is less intrusive than a phone call (never show up in person unannounced). Consider sending your tenant(s) an informal email message every six to eight weeks or so: anything more frequent runs the risk of becoming an annoyance, while checking in only a few times a year is not especially useful for either party.
Keep the tone of these messages friendly, asking if the tenant has had any problems with the unit or needs to suggest any needed or upcoming repairs. By positioning yourself as a helpful owner looking out for the occupant’s needs, you will help strengthen the landlord-tenant relationship. If nothing else, a tenant who views you as more than just a bill collector is more likely to give you additional notice if they have decided to move out.
The Going Rate
The value of a good tenant to a landlord is not simply measured by the monthly income generated from rent. The timely payment of rent also provides the landlord with a degree of financial stability, which can be rare in this time of seemingly volatile markets. In addition, responsible tenants serve as dependable stewards of the property itself, avoiding damage and alerting the landlord when repair or maintenance is needed. These factors, in addition to the current rental market, must be taken into account if you are considering any future change to the rental price.Conventional wisdom tells a landlord to charge market value for rent. But when contemplating a future rent increase, consider whether you are willing to risk losing your current tenant for that potential bump in rent. If your current tenant isn’t willing to pay the increased rent, putting the rental back on the market entails built-in costs (cleaning or painting not covered in the damage deposit/rental agreement, plus the inevitable turnaround time that will leave the property vacant). You run the risk of having the property remain vacant for long stretches of time. At best, you may end up renting to a less responsible tenant who causes damage to the property or does not pay rent on time.
Simply put, now is likely not the time to increase rent based on motives of increased profit. If you must increase rent for legitimate reasons related to the property (skyrocketing property tax, for example), do your best to keep the rent increases minimal and provide your current tenant with as much information on why you are making the change as is possible (or prudent).
On the flipside, if you are able to keep the rent at the current rate or are in a position to lower rent to match current market rates (based on all that research you’re doing to stay current on rental trends…), make sure to call your altruism to your tenant’s attention. To many renters, not having to pay an increase in rent year after year is refreshing. Having rent lowered may feel like a small miracle in their eyes.
Make Timely Repairs
It can be too easy for property owners to view their rental units solely as investments, losing sight of the fact that for the occupants, that space represents their temporary home. When problems arise, as they always will, take charge and handle repairs both quickly and effectively. Nothing will erode a renter’s confidence in their landlord as much as the poor handling of maintenance issues.Be prepared for potential problems by keeping a list of recommended repair companies and contractors in the area. Treat all reported issues seriously and communicate frequently with your tenant to fully understand the problem. Most importantly, prove your thoroughness by following up with both the repair crew and your tenant after the problem has been resolved.
Spend on Upgrades
Property owners often will wait until the periods in between tenants to make improvements to the property, in many cases with the intent of charging higher rent for the next round of occupants. Landlords who are fortunate to maintain tenants for several years in a row may forgo both smaller and significant enhancements to the home. However, if the overall goal is to keep the property rented to a strong tenant for the most amount of time possible, making gradual improvements that improve the occupant’s home life (without causing undue disruption) can make a great deal of sense.As a landlord, you can’t reasonably expect a tenant to put up with any changes or improvements that require major construction or losing use of a room/area for any significant amount of time. But many improvements and enhancements can be made in the period of a single workday with minimal disruption. For example, with the help of a good installer, a kitchen appliance or dishwasher can be replaced while your tenants are at work. Smaller-scale upgrades, such as changing out the hardware in a kitchen or bathroom(s), can also go a long way in improving the atmosphere for your renters. If you’ve established good communication with your renters, you may even consider asking them which areas of the home or appliances they feel need improvement.
Incentivize
If the rental market surrounding your property is dire enough that the loss of your current tenant almost certainly will result in a long stretch of vacancy, you may consider offering the current occupants significant incentives in order to sign a new lease. You may go as far as offering a month’s free rent, pay a specific utility, or pay for the upgrade to a current utility service (such as internet or cable/satellite).Incentives don’t necessarily have to be of a monetary nature, however. If your tenants would be interested, you might consider allowing pets in the property (with or without an additional cleaning deposit) if you did not permit them previously. Another option would be to allow tenants to re-paint the interior walls and/or exterior of the home – even going so far as to help furnish paint and supplies. These non-cash incentives can help increase your renter’s sense of connection to the property.
The article is taken from one of our recent Newsletters that was e-mailed to all registered subscribers, via our RE/MAX of New Jersey web site.
Visit my web site for real estate services and support: LawrenceYerkes.com [NJ/PA]
and visit Besthomes-NJ.com to find the latest New Jersey Real Estate property listings (Residential, Commercial, Multi-Family, Farm, Land).
Copyright 2011 by Lawrence Yerkes. All Rights Reserved.
