Having a vacant property will be the largest expense a landlord can incur. Not only are you losing a fixed amount each month in rent, when you take into account the costs of advertising, getting it rent-ready, and the monthly mortgage costs you still have to pay, the totals quickly stack up. So once you find a good tenant, holding on to them longterm becomes significantly important.
Let’s talk about three reasons why it may be more cost effective to renew with your current tenants than to start the leasing process over again.
#1- Turnover is Expensive
It rarely matters WHY you’re renting the property, cash is cash, losing it stinks. Let’s remember the goal is to make money. It’s an investment….. That being said, you can’t make money on vacant property. This makes tenant turnover one of the biggest expenses a landlord can incur. Your mortgage company still expects payment. You must market the property, schedule and show the home to find a new renter, which takes time and money, even if your previous tenants left the home spotless, there are still maintenance items you’ll have to address to get it ready.
#2- Renewal Rates vs New Lease Rates
Rental rates depend on what the current market says a property is worth. Data shows that owners who chose to renew with current tenants vs starting from scratch had higher increases in rent. Moving is expensive, and if you offer current tenants a reasonable rate and they’re generally happy, odds are they’ll choose to stay. Remember, If they stay you don’t have to deal with a vacancy, advertising or have to miss Timmy’s tee-ball game while you wait for prospects that continually ghost you.
#3- Why Change What Works?
f you have a tenant who is happy, pays on time, follows the lease, and maintains the property,, it makes sense to hang on to them. After all, good tenants can be hard to come by and you never know what challenges you might run into with a new pool of renters. While you screen for credit, criminal, and rental history, accounting for changes in life circumstances isn’t possible. People lose jobs, face divorce or health issues arise. You may even run into new tenants who require a lot more hands-on management than previous ones. Holding on to a good tenant is good, life’s short. You can’t have too much of a good thing!
Tenant retention is key to making a profit on your investment. If your rental is vacant, not only are you generating $0 income, but you end up owing, too. So when it comes time to renew the lease on your rental, make sure to consider the benefits of tenant retention and whether or not it makes sense to hang on to the ones you have.
Matt’s an Ohio licensed Realtor with 20+ years experience in residential and investment sales, leasing, property management, and offers pre-purchase consultations and BPO’s for investors, lending institutions. Matt currently works as the Sales Manger at Real Property Management. You can contact him at 866.500.6200, via email ([email protected]) or DM on twitter @CincySalesGuy
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