In an ideal world, you would never have to find new tenants for your investment properties. You would purchase the property, make any necessary upgrades and repairs, find a quality tenant to fill your space, and voila! You are set for years to come. Unfortunately, this is not a very realistic scenario. While it’s nearly impossible to have zero tenant turnover, understanding the components of tenant turnover and the factors that influence and impact it will help you retain great tenants and maximize your property’s performance.
In this blog post, we will take a look at five strategies that will help you reduce your vacancies and increase the profitability of your investment.
1. Be proactive with your current tenant
At the very least, vacancy disrupts your cash flow. A huge part of being creative in your strategies when managing tenant turnover is preparation. If you experience vacancies, don’t panic, plan for it. Be sure to pay attention to your current tenant leases and pinpoint each lease expiration date. By doing so, you can invite tenants to renew their lease well in advance of their lease expiration, which is beneficial to both you and your tenants. How so? This proactive approach gives everyone enough time to plan for the future. Remember, time is money. Even if your tenant decides to move out, you will have more advanced notice and be able to begin advertising your space sooner. That way, you may even have a new tenant lined up as soon as your current tenant moves out, preventing you from losing rental income and avoiding uncertainty.
2. Provide an incentive to renew the lease
Another way to reduce tenant turnover is by offering incentives to your current tenants and in many cases, the incentives you potentially offer will cost much less than the expense to carry a vacant space. An example: Offering your tenant discounted rent for the first month of their lease renewal is a better option for you than letting your tenants go, because you don’t lose money on turning over the space if they stay. Offering such incentives not only shows your tenants how much you appreciate their tenancy, it can also make the expense of moving look far less attractive.
3. Consider improvements
It’s no secret that tenants are often willing to pay more to stay at a property that they feel proud to be a part of. How others perceive the property is a significant detail that many tenants sincerely value and reasonably so – they want to attract customers. Using resources wisely to invest in your property’s appearance so it appeals to the public is a great way to retain the quality tenants you already have. You’ll maintain the steady and consistent cash flow from your existing occupants who opt to renew their leases and raise the property’s desirability for years to come. Cosmetic improvements such as upgraded signage and landscaping or a newly rebuilt walkway can give your property the characteristics it needs to outshine the competition and increase the value of your investment. Other modifications such as switching to energy efficient lighting can also help minimize your operational costs. These types of improvements can translate to lower tenant turnover rates, and higher rent returns in some cases.
4. Refine your advertising strategy
You want to cast a wide net when advertising your space. This is because the greater the pool of prospective tenants you have, the better your chances are at finding a quality tenant in a timely manner. In today’s fast-paced world, you need to implement a combination of traditional and online advertising to create the most interest. Be sure to publish your listings on multiple websites and advertise in several publications for maximum exposure. Understand what features tenants are currently looking for and be sure to include those features in your ads. Remember to disclose all necessary information about the available space and set expectations upfront about any requirements. Additionally, the details of the property itself need to be clearly outlined in your advertisements. Lastly, keep in mind that very commercial property has unique features and strengths that can be weaved into a promotional strategy. Use those strengths and enhance them with professional photography. When your space is vacant, have professional photos taken to showcase the space and generate public interest. Professional photos are an absolute must if you want to promote your space effectively and get it occupied quickly. Remember this.
Tip #1: Reach out to your existing tenants and let them know when your space is coming up for lease
After all, quality tenants are likely to know other quality tenants and they may be able to provide you with some great recommendations.
5. Make that Extra Phone Call
Another important piece of this puzzle is taking the initiative to reach out to your tenants to get their feedback, because let’s get one thing straight; tenants want to feel they are well cared for. How you treat your tenants and how they perceive you as a landlord has a lot to do with encouraging this shift in perspective. In other words, tenants that feel their concerns are being adequately addressed are much more likely to stay rather than dealing with the alternative of having to move.
Tip #2: Check in with your tenant after a recent repair has been made
Doing so ensures that everything is functioning properly in their space and there are no further issues or concerns. Even if they haven’t voiced any concerns or issues to you, it doesn’t necessarily mean they don’t have any feedback to share. Effective communication is key to tenant retention and satisfaction. Without it, you are neglecting a very basic level of service that could lead to a tenant moving out upon the end of their lease term. The idea is to make their lease renewal a no-brainer.
