Small Incentives That Keep Your Tenants Happy
With mortgage interest rates so low, now is a great time to own a rental property. One major reason that people shy away from investment properties, however, is tenants. Tenants can be a nightmare, or they can be a great asset. A happy tenant will take care of your property, while an unhappy one can cause thousands of dollars worth of damages beyond what their security deposit will cover. Clearly, a successful landlord wants to keep his tenants happy. So how can you do that? Let’s look at three minor things you can do that will be very much appreciated by your tenants.
1) Holiday discounts or coupons
As the holiday season is upon us, it’s good to keep in mind that times are tight, and your tenant may be buying less presents due to paying your mortgage for you. Why not show them a little appreciation by offering them a coupon for $50 off their next month’s rent? Send your tenants a holiday card in the mail along with a coupon that says something like “Happy Holidays! Include this coupon with your January rent and take $50 off your total.” The tenant will appreciate the thought, and especially the extra cash in their pocket for the holiday season. You may even be able to use that expense as a write-off for your business on your taxes. Consult your CPA or tax attorney for details.
2) Be responsive
When a tenant has a concern, try to address it as soon as possible. Recently in one of my rental units, the pilot light went out. I went over to try to restart it, but the safety valve on it was broken, so it wouldn’t stay lit. It happened to be Thursday night, and the next day was Remembrance Day, and a three-day holiday weekend. I wasn’t able to get a plumber in to fix it until three days later, but because I was so responsive to the tenants’ concern, letting them know I was working on it and keeping them updated on the progress, they were appreciative of my hard work on their behalf.
3) Below-market rents
While it seems like this might be costing you a big chunk of money, it actually doesn’t. By having your rents slightly below the going rate, you will gain three major advantages. One, the tenants will be appreciative and hopefully take care of your property. Two, you will have more people fighting to rent the property. More applications when it’s on the rental market means more people to choose from, so you can get a more qualified tenant who shows a good rental history, long-term, stable income, and great credit score. You will get to choose from the cream of the crop in tenants. Finally, and perhaps most importantly, setting your rent below market rent means you are likely to have less vacancy.
Tenants will stay longer, and the unit will rent out much quicker. You may make more money having your rent lower. Picture this: Your rent is $1,000/month (market rate). It takes a month to rent your empty apartment. Tenant stays a year, then leaves. It sits empty for a month. Over those 14 months, you made $12,000 from when it was rented, but didn’t get the $1,000/month in the two months it sat empty. On the other hand, by dropping you rent to $950, you may be able to get it rented out right away, and have the tenant stay longer. Over that 14 months you’ll make $13,300, an extra $1,300 by having your rent lower and your tenants happier.
Keep your tenants happy. Whether you offer them holiday coupons, try to be extra responsive to concerns, or thrill them with a great deal at below-market prices, having terrible tenants or wonderful ones can make or break an investment property experience. Make sure yours is a good one.