How to Mitigate the Problem of Tenant Turnover

Tenant turnover is a problem for property managers for a number of reasons. When a tenant leaves your property, you’ll no longer be able to generate income from that property. At the same time, you’ll have to continue paying expenses for that property. And if your properties consistently have to deal with relatively high tenant turnover, it could look bad for you as a property manager and make it harder for you to find tenants in the future.

Thankfully, there are many strategies you can use to mitigate the problem of tenant turnover.

Directly Minimizing Tenant Turnover

These tactics can help you minimize tenant turnover overall.

• Offer flexible terms. Although it may not be entirely to your advantage, you can offer more flexible terms to your tenants to keep them longer. Consider offering compromises to broaden your potential appeal and make it easy for tenants to live at your property. If tenants are happy with the agreement, they’ll be much more likely to stay.

• Practice tenant screening. Get in the habit of screening every new tenant. Landlords are often tempted to fill their properties as quickly as possible so they can start generating income, but if you accept a tenant with inconsistent employment or lackluster income, it’s going to work against you. Accordingly, it’s prudent to thoroughly investigate every tenant prospect so you can be sure you can find a good fit for your unit.

• Set expectations early. Some vacancies arise because of a mismatch of expectations. It could be that tenants expect certain conduct to be acceptable, or it could be that tenants find landlord expectations to be unreasonable. Either way, you can mitigate these problems by setting expectations early. Make sure all your terms are thoroughly and clearly spelled out in your lease agreement, and use tenant onboarding to clarify items further. You may not be able to come to a perfect meeting of the minds on every item, but you can avoid a lot of problems this way.

• Communicate clearly and often. Similarly, you should communicate clearly and often with your tenants. Give them multiple communication channels and multiple ways to reach you, and follow up occasionally to make sure everything is going alright.

• Respond promptly. When tenants reach out to you, respond promptly, even if you don’t have a firm answer for them at the moment. Letting them know that you’ve seen their message and that you’re going to handle things is typically enough to mitigate communication issues.

• Fix issues quickly. When problems do arise with the property, and they certainly will, make sure to fix them or address them as quickly as possible. Even if the circumstances aren’t perfect, your tenants will appreciate having a landlord who genuinely cares about maintaining a habitable property.

• Use regular inspections to your advantage. Consider employing regular home inspections so you can keep an eye on the condition of the property. It can help you keep things in order and save money at the same time.

• Give incentives. Consider giving tenants incentives for staying with you. For example, you might give more leniency to tenants who have been with you for a while, or you might send small thank-you gifts around the holidays.

• Update when you can. Depending on the nature of your property, it may make sense to make updates periodically. Even relatively small investments can make a big impact on tenant happiness and satisfaction.

Making the Most of Tenant Turnover

You can also employ strategies to make the most of tenant turnover when it does happen. Despite your best efforts, some tenants will leave due to circumstances beyond your control. Inevitably, you’ll lose tenants who have to move, tenants who have outgrown this space, and tenants who die or face significant health issues.

Since you can’t prevent tenant turnover in these cases, you can utilize it to your advantage. For example, you can use the present vacancy to handle some maintenance and repairs, or make upgrades and improvements that will make your property more attractive to others in the future.

Portfolio Management

Seasoned investors know the value of diversifying a portfolio. Essentially, this means investing in many different assets so you can counterbalance the risks and weaknesses of each. In real estate, portfolio management is a great way to minimize the risks of tenant turnover. If you have many different properties in different areas, and multiple units in each of those properties, single vacancy isn’t going to impact you much. Further, a single property with turnover issues isn’t going to compromise the entire value of your portfolio.

Managing tenant turnover isn’t easy. In fact, it’s one of the hardest aspects of property management. But if you can get a handle on it and keep it to a minimum, you’ll be in a much better position to turn a handsome profit.