KEEPING TENANTS LONGER
© Copyright 2001-2014 Landlord.com
PART TWO
Having dealt with the basics, you have defined your product. The way you deal with the basics not only gives your tenants a reason to rent, but, if you establish yourself as responsive and fair, a reason to rent from you. Now for the bells and whistles. If employed with tact and taste, they can cement a relationship that will be rewarding for both you and your tenant.
It is not enough that you are concerned about the quality of your product and its maintenance. It is also important your long-term tenants perceive that you are concerned. For this reason, you, or your manager if you have delegated that responsibility, must be seen on the premises. It need not be often, but it should be meaningful.
Invest in a clipboard. Nothing is more apt to clothe its possessor in an aura of authority and business like focus as a clipboard, well stocked with papers, thoroughly written upon. When you go to the property, carry your clipboard, not one of those leather things that you can close, but the old fashioned kind. Make sure the topmost sheet of paper has writing on it, and have a pen or pencil clipped to it, ready to take notes.
When on the property do not intrude on the tenants by knocking on doors unless you have a specific reason to do so, or have made an appointment. If your property is a single family residence, or a very small multi unit dwelling, monthly or bi-weekly visits may not be practical, but do make an appointment to visit at lest once a quarter. If you do find people in the common areas, engage them in pleasant conversation. Ease into subjects concerning the property as a whole, then their unit in particular. Make notes. This conveys the impression that you are concerned, which is as important as actually being concerned. You will be amazed at how much information you can develop, in a relaxed and, therefore, frank atmosphere. Then act on your notes.
You will have a continuing interaction with your tenants as they pay the rent. Most of them will not initiate contact with you in the absence of a catastrophe. This is no reason for you to avoid contact with them. True, we do not want to intrude on their lives willy-nilly. Most tenants do not ache to converse with their landlord on diverse topics not related to their unit. On the other hand, why not resolve to make at least telephonic contact with each tenant a minimum of every 90 days.
Such a telephone call, scheduled when it is likely that the tenant has finished dinner, but is not watching Monday Night Football or putting the kids to bed, might begin, “Mrs. Jones, this is your landlord, and I just wanted to say that I appreciate your timely rent payments. Thank you.” After she says “you’re welcome,” you might say something to the effect that, having heard nothing for some months, you just wanted to make sure everything was going well and to ensure there were not some small things which need attention.
Now, this is not necessarily fishing for maintenance requests. Mrs. Jones might say that occasionally the garbage disposer gets stuck and she can’t use it till her husband gets home. Your response would be that she borrow the disposer wrench from the resident manager next time it happens, or that the disposer may not really be stuck, but that she needs to try the reset button on the bottom to bring it back into service. It costs you nothing, and she might be very grateful and impressed.
On the other hand, Mrs. Jones might mention that she found a cockroach the other night. This would be a warning flag that a roach infestation is getting out of hand. You could respond in any number of positive ways, but the advance notice of the problem you get could be a real money saver.
The point is, when Mrs. Jones is visiting Miss Smith in the complex across the street, and Miss Smith complains she never sees her landlord and he won’t fix anything, Mrs. Jones will say, “our landlord even calls up occasionally just to make sure everything is OK.” It makes Mrs. Jones feel good about staying where she is, and Miss Smith think hard about moving into your latest vacancy.
Try planning to keep a couple of heavy-duty fans and a portable heater on hand. That way, if the tenant’s furnace goes out on Saturday, there will be a loaner available till the repairman can arrive, without expense to the tenant.
Prepare a move in packet for your new tenants. This may be simple or elaborate as you choose. It might consist of one of those inexpensive but attractive cardboard portfolios available from office supply stores. Put a complete copy, including copies of signatures, of the rental agreement, house rules and any addenda in the left pocket. Then in the right pocket a sheet with frequently called telephone numbers and addresses, such as the resident manager, police and fire departments (both the emergency and non-emergency numbers), public transit companies or agencies, phone and power company numbers, and so on. Insert brochures from some local businesses like dry cleaners, sandwich shops, etc. Arrange to drop this by on move in day, perhaps with a key chain with your logo and phone number on it. Most of this information your tenant might already have obtained, but it is amazing how much is lost when moving, and having it all ready to hand in one neat package will be greatly appreciated, while costing you next to nothing.
If you follow the suggestions given above, you will see your tenants staying longer, which means that you must deal with what happens between the second and third year into the lease. About three years in is where the paint starts to look scuffed and dingy, the carpets undoubtedly need a professional cleaning, and a lot of minor cosmetic things start to arise. These do not affect the warranty of habitability, but they may affect the tenant’s pride in the unit. If the tenant has been there for three years with rent paid on time, why not offer an apartment repainting and carpet shampoo if he will sign a new one year lease? You will have to do that anyway if he moves and you prepare the unit for a new tenant. You will not get away with charging it to the old tenant’s security deposit after three years. Since there is no pressure to do the job in time for a new tenant move-in, your handy man can schedule it at a time when things are slow and maybe even give you a break on the cost.
The exit interview, if properly handled, can be of great help in tenant retention in at least two ways. If a valued tenant gives you his notice of termination, usually at least 30 days, schedule an appointment to spend ten minutes with him within a day or two, just to “go over the details of the move out.” If you have not been employing the “landlord as phone company” style of management, i.e., totally nonresponsive and indifferent, the tenant will not object. Get the tenant’s forwarding address. If it is a thousand miles away, wish him well, confirm the move out date, and schedule your workmen to prepare for a new tenant. If it is an address across town, try to find out why the tenant is moving. It may be something as minor as his feeling that he would like to move into a new, fresh apartment, and just assumed that you would never paint his unit and replace the kitchen linoleum after five years. You may find that by attending to something as simple as this, you can prevent the move and induce this valuable tenant to remain. Even if the tenant is adamant, then you have still gained the valuable knowledge that your tenant retention program needs work.
T he suggestion has been made by some writers that an effort should be made to sign the new tenant up to a multi-year lease, as opposed to the more usual 6 month or one year term. It is indeed true that by signing the tenant up to a two year lease, you have a better chance of retaining him for at least two years (a smart tenant will probably maneuver you out of a two year lease if he really wants out of it). Just remember that a two year lease works two ways. What will you do if the new prospect, Mr. Wonderful, turns out to be straight out of “Pacific Heights”?
A sometimes suggested technique for giving tenants a “sense of shared ownership” in the premises, is to suggest appliance and other upgrades if the tenant and the landlord split the cost. In other words, go ahead and replace the current refrigerator with the 27 cubic foot model with through the door ice and water the tenant has suggested if he pays half the purchase and installation. If this is done, it must be done in strict compliance with all law, and covered with an agreement in writing that the refrigerator stays. If the tenant moves in two months anyway, or you are forced to evict for nonpayment of rent, you may become embroiled in litigation about who gets custody of the fridge.
Another frequently suggested technique is the “tenant trading stamp promotion.” Most of us remember Green Stamps, then Blue Chip Stamps. When purchases were made from a participating merchant, the customer would get a number of these stamps, depending on the size of the purchase. These would be placed in a book and could be redeemed for merchandise or (a nominal amount of) cash. The idea was to get the customer to keep returning to the merchant so that the customer could get more and more stamps by making more and more purchases.
The landlord’s variant is usually as follows. A policy is set up that if the tenant does certain things for the whole year of his lease (usually things he has agreed to do anyway, such as to pay the rent on time), then the tenant gets something when he renews, such as a free decorator toilet plunger. Such promotions, on their surface, seem practical and inexpensive. When analyzed, however, they can be seen to have at least two serious drawbacks.
First, assuming, without conceding, that these promotions have any value, it is to motivate the tenant to do something in exchange for the prize. This motivation exists only as long as the ability to win the prize exists. Imagine the tenant, in the second month of his twelve month lease preparing his rent payment, so excited contemplating the decorator plunger he is going to be awarded next year, that he forgets to put a stamp on the envelope, and he has a late payment. Now he will never have that plunger. What will motivate him for the other ten months of the lease?
Second, in an effort to correct this defect, the landlord sets up something more like a trading stamp deal. Each month you pay the rent on time, you get a certain number of points. If you are late, you don’t forfeit the prize, but don’t earn the points. However, if the rent is late because the resident manager had to have an emergency root canal and the office is closed, you get half the points. As you can see, such promotions can easily promote confusion and headaches more than anything else. Also, consider to what extent the promotion becomes a part of the rental agreement.
A far better technique is simply to have an appreciation program for your tenants in which you extend them an appropriate courtesy for faithful performance of their obligations through thick and thin, and in anticipation of their continued custom. You decide when the reward is appropriate and when it will be awarded, anything from a thank you note to a discount coupon to be applied to one month’s rent. You decide when, to whom, how and what. Then keep quiet about it.
The literature is replete with proposed methods of tenant retention, some stressing subtle psychological pressures, others bizarre and even offensive recipes. The truth is, the key to tenant retention, as we have emphasized, is to provide the basics, to provide them better than your competitors, and to ensure your tenants understand this and that you consider them to be important. Because of the inherent impermanence of the landlord tenant relationship you will not keep your tenants forever, but you will keep them for as long as you can.
| Tips & Tricks
|
Landlord News
|
Take The Test
|
