fbpx
Strategy Saturday
SS50: How To Retain Excellent Tenants
November 29, 2021
0

Charles discusses what steps landlords can take to keep excellent tenants in their property.

Watch The Episode Here:

Listen To The Podcast Here:

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing how do you retain excellent tenants? And if you’ve heard any of my other videos, you’ll know that with multi-family the way to really boost your income is by having tenants stay long-term. And the best way is to have tenants stay long-term of that are excellent tenants. So how do we keep them? Well, number one is we need to screen the tenants correctly. You’ll never have excellent tenants if you don’t screen well. And I feel this one of the biggest mistakes owners make when they’re renting their apartments. And this is why if you bring on a third party manager and they’re doing the renting for you, you might find that you’re getting better tenants. Why? Because they have metrics and they’ve taken away the emotion of it. They don’t, they don’t really the number one priority.

Charles:
Isn’t paying your mortgage, right? Number one priority is getting the apartment, rent it to someone that fits all of these different checks, all these boxes that they’ve laid out for every tenant. And if it doesn’t, then they’re gone and they’re off to the next tenant to review. So this is a pretty straightforward process, you know, create requirements to alternate, need to abide by when applying and do not deviate from them. For example, you know, three times rent in monthly income, no felonies in the last X years, no pets credit above Y no events, no fictions, et cetera. And if someone checks all these boxes, then they can move to the next to the next phase or get approved for the apartment. And by just holding and having a set factors and requirements that every tenant goes through, you’re going to really avoid having issues.

Charles:
Number two, you don’t run the person through your local records. Your court records search online manually. So you can mainly run a records check and through local courts through the state court, and you can run the person’s last name. If they have a very common name, this might be a little bit more difficult, but don’t rely on your background service to do this right, do it yourself. And that is where you’re going to weed out people that might be professional tenants, and they might have an extensive or might have previous evictions that, you know, what they just forgot to tell you. So check them manually, and then also run them through your requirements. If they, if something comes up and it’s a red flag, you have to move to the next tenant, no matter how much you like them next, provide good customer service and keep the property in good condition.

Charles:
And this is just really simple, but a lot of landlords, a lot of property managers just don’t do this handle maintenance requests. As soon as possible. Someone calls you with something, you know, respond right back to them, you know, at address other issues as soon as possible. So if someone has an issue with something, their apartment you know, stove isn’t working correctly the faucet’s leaking. You should be out there anywhere for that, especially if you’re paying for water. But anything like this get right back to them, respond quickly to all messages and then tell them someone’s going to be out there as soon as possible within 24 hours, whatever it is to get it addressed. If there’s other issues like someone’s parking in my spot, or I’m at other tenants are allowed or you know, whatever it might be make sure that you’re addressing that as soon as possible.

Charles:
Even if you feel it’s silly. I mean, you’re going to get some people that are just high maintenance tenants. Okay. but if you can address their issues, then if they are still requiring stuff that you feel is not your responsibility event, you need to have a talk with them, or you need to kind of train them and saying, listen, if you have an issue, we’ll take care of it. This is not something you know of that we will handle this as your apartment, and you have to have a talk with them as soon as possible. But when you have good tenants, you make sure you can keep them by responding to messages, quickly handling maintenance requests as soon as possible and addressing any other issues. As soon as possible. I’ve heard of some landlords reaching out the tenants to keep in touch with them.

Charles:
I personally do not like doing this since if I was a tenant, my landlord called me and there was no issue. I probably wouldn’t call him back. Right. I don’t want to be bothered. I’ll pay my rent if there’s an issue of that’s when I need you to act. You know, and that’s kind of how I act as a tenant. And if I don’t, I wouldn’t just be calling up tenants and being like, Hey, how’s everything going? Or some of them contact people on social media, definitely not what we do. You know what I mean? It’s really, when they reach out, we want to keep in contact with them. And we want to make sure that we answer their questions, their inquiries, and their requests, as soon as possible, you know, just provide good customer service. And when there’s an issue, you know, fix it correctly the first time, right.

Charles:
Don’t try to get cheap on something. If something’s an issue you know, you’re having an issue with someone’s fridge and it’s the second time you’re sending out a guy, you know, you’ll have to get a new fridge, right. It’s just what it is. If they’re a good tenant, I mean, think about that. If you were in that situation, they come over and they try to piece meal together. And two weeks later, it breaks again, listen, just get them a new fridge. It’s going to cost money. But if you can keep the tenant it’s worth, I mean, heart, good tenants are hard to come by. So when you find a good tenant, make sure you keep it by providing good customer service. Next is keep track of lease renewals, okay. Actively pursue lease renewals, not just when it’s coming up to the end, but most tenants are aware of and expect annual rent increases.

Charles:
Now they don’t know how much they’re going to be, but they know that Hey, stuff goes up every year. And you know, when you were initially signing a lease with them, let them know you’ll contact them. About 60 days before the end of the lease to renew. Now, some landlords and managers will try to achieve full market rent on renewals. Now, if this is more than 5% increase I would advise against it. You know, when you’re starting to raise rents above 5%, it starts making it financial, beneficial, financially beneficial for the tenants to move. You know, they might be getting one month free at the new complex that they might move to. So if you raise rent 10% and they get a free month, it is worth two months of rent for them to leave, you know, a $50 U haul. It doesn’t seem that bad of a, of an investment.

Charles:
So your goal is to raise rents slightly in good tenants and to keep them while minimizing vacancy and unit downtown. And you know, you can achieve the full market rents when a unit turns over, there’ll be some people that disagree with me, but if I have a good paying tenant, I’m not going to start jacking the rent to what I feel is the market. Every time on renewal, I’ll raise a little bit, maybe I’ll raise it a little higher than how the market is increasing, but I’m not going to go all the way to market. I just want to, you know, the main thing is that you’re raising the rent every year. They’re aware of it. They know it. So if they’re there for two or three years, they know, Hey, this an annual increase every year, and you can let them know that we will send you out the release renewal 60 days before the end of your lease with you know, with the new lease, the terms and the new rent amount, and they’ll know off the bat, right?

Charles:
When they’re signing the initial lease that it’s going to go up. You know, additional points is always raised at rent, even if it’s only $10 a month. Okay. It needs to be a habit that every year the rent will increase. And if you’re in a cash flow market you know, I have some apartments that are in cashflow markets and we might go nine 15 to 9 25, right. They’re not huge appreciation market, but my landlord will go up there and raise it two or 3%. And that’s just what I, you know, that’s what we can achieve. And it just keeps the rent moving up. Right. you have to also remember your debt is not going up. If you have fixed long-term debt, it’s not going up. This is to cover any type of increase on your operational expenses or don’t sign to your leases.

Charles:
You know, one year leases allow you to raise rent more often, thus keeping your rents up with inflation and your market. Now, some states, some states might also require witnesses on the, on leases over one year. Just avoid it. I mean, really the more often you’re able to adjust the rent, the better you’re going to be, because you can raise it more often. Okay. trying to avoid tenants, wanting to transition to month to month lease. If they insist and are good tenants, I would raise the rent maybe 10 to 15% from the 12 month renewal lease amount you know, price and make sure you require a 30 day plus notice because it’ll be allow you to prep for them to move out. Now, some people will say, no, it’s only 12 months. And I understand that, but personally, I would rather have a good tenant for 18 months.

Charles:
First 12 months, especially if months, 12 to 18, they paid 10 to 15% more. I mean, what could be better? Right? They’re going to leave anyway. You might as well get as many months out of them as possible. And you can minimize downturn on your unit. Okay. So incentive five tenants with a program. I’ve read about this before and they say, oh, you know, you can have a $50 or $75 renovate, like some sort of new program, some new something done to your apartment, right? A renovation or something new. That’s worth 50 to $75 every year. If you stay and all this kind of stuff. I personally, if I was a tenant, it’s one more thing. I had one more reward program I have to worry about. I wouldn’t want to do it. Right. Why don’t you just not raise my rent, raise as much?

Charles:
That’s my thinking with being a tenant. And I think that’s what most tenants would want to do. So I don’t do any type of sensitive programs. When we were going through COVID people pay on time, stuff like that. We might have a raffle for like a, a Walmart card or something like this. And that’s a little different. You could also do that during a regular time, but, and send the five tenants with a program on a per unit basis. I mean, that’s just going to be like really a mess to have, to keep track of one more thing. Your property managers are going to do. If your property manager brings it to you and they have success with it and they can show you stats and maybe I would move forward with it, but it’s not something that we really focus on.

Charles:
I really focus on finding good tenants providing good support with them and customer service and trying to retain them as long as possible. For the length of their stay. Now I would focus on making upgrades to units as required. And if a tenant asks for something to be changed or upgraded, if it’s not that large of an upgrade or something, you need to change it, tell the tenant, you’ll do it upon lease renewal. Like for example I think at one tenant ones that wanted new blinds, right? And they weren’t that expensive. And it, it was right after I purchased the property and I know they’re they’re on a month, a month or something like this. Be like, listen, like if you sign a new lease with us cause I know you’re a month, a month right now, sign a 12 month lease.

Charles:
And you know, we’ll go through and we’ll change these blinds that you’re talking about that are broken or whatever it is. And they did. And it’s something that, okay, now I got them on it. It’s a win-win right. They get a 12 month lease. I’ve get a little bit of a rent increase on them. I get them on a 12 month lease. I mean, these are all pros for me and just them sending someone in there to put in some new blinds. They weren’t really expensive lines or anything like this and a couple of windows wherever it was perfect. Not a problem. So make sure it’s a win-win because they will, you know, if you’re, if you’re always by the book on everything you know, you read some program or you went to some conference and they tell to tell you how to do that. I mean, that’s not how the real world works, right? You want to make money as a landlord, especially when you’re getting in the C class real estate, you have to kind of bend the rules a little bit and work with people to get paid and to keep good tenants. Right? So I hope you enjoyed, please remember to rate, review, subscribe, submit comments, and potential show topics at global investors, podcast.com. Look forward to two more episodes next week. See you then.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

Links Mentioned In The Episode:

0

About author

Admin

Related items

SS57: How to Successfully Hire and Train Virtual Assistants

SS57: How to Successfully Hire and Train Virtual Assistants

Read more

SS56: Real Estate Joint Ventures Vs. Syndications

Read more
SS55: What is Rent Control and Why Does it Hurt Tenants?

SS55: What is Rent Control and Why Does it Hurt Tenants?

Read more

There are 0 comments

%d bloggers like this: