According to the National Apartment Association, over 40% of apartments in a complex with more than 200 units turnover each year. The percentage can be even higher with apartment complexes that have fewer units. While turnover rates are inherent to owning and operating an apartment complex, lowering your turnover rate is something that you as a landlord want to always be striving toward.
I have already written an article that shows just how much tenant turnover can cost a landlord. It is essential to maintaining the profitability of your apartment complex. The costs for turnover can become prohibitive and are sometimes an unrecognized cost of doing business. Most landlords will track other metrics like occupancy rate, cost of living increases, local job markets, and comparable alternatives to their own complex, but surprisingly, many do not take a long enough look at how tenant turnover is affecting their profit.
Good tenants don’t always just show up at your doorstep, however. It is your responsibility to do everything in your power to make sure you are not only attracting good tenants but keeping your best tenants as well. The last thing you want to have happen is to fill up your complex with poor tenants that are just going to be using your complex like a revolving door or lose those tenants who are your low impact, good neighbors, and on-time payers.
We are going to go through the things you can do to not only attract the right type of tenants but then keep those tenants who are really making your complex great.
Screen Your Tenants Before They Move In
The biggest impediment to having not only good tenants but a profitable apartment complex is by ensuring that you are getting the people moving in that you really want and need.
So many times, landlords are so concerned over the percentage of units they have filled, that they are willing to overlook things in the application process just to get someone else moved in. Sometimes this is pressure on the landlord to the manager to keep occupancy rates high, which justifies the manager’s positions. And other times it is just due to laziness or a lack of due diligence on the part of the landlord themselves.
You don’t just want to let anyone into your apartment complex no matter how upscale or economy it is. Whatever the price range and demographics you are targeting, there are going to be good tenants and there are going to be bad tenants. All people are not interchangeable. Some are going to outshine others. We wouldn’t have locks on our houses or cars if this was not the case.
The primary ways that you can weed out potential bad candidates are right away in the application process. When the tenant fills out an application, this gives you the opportunity to check what kind of person is wanting to rent, where they have rented in the past, and if they pay on time.
It is also going to give you the opportunity to do a Credit Check and Background Check on them as well.
A credit check is going to do a couple of things for you. The first is it is going to allow you to see what the actual credit score of the applicant is. A credit score is basically a metric that shows how good that person is with handling debt and paying the money back. The higher the score, in general, the better the chance the person is going to pay their debts.
A credit score will also show a landlord if they are chronic late payers. If the applicant is late in paying their rent and other obligations on a regular basis, this is going to show up on their credit report. These metrics make it possible to determine if the person has the potential to be a good fir or not in your apartment complex.
The background check is the other part of the application process. A background check allows a landlord to see whether or not the applicant has any legal judgments currently out against them or have had anything in the past several years.
As a landlord, you want to make sure you do this step in screening and due diligence not only for your potential profitability but for your existing tenants as well. They are unable to screen who you are putting next door to them; therefore, it is your responsibility to make sure you are putting good renters in your units.
The background check and credit check are the two primary ways that you can sift through and discard some of those applications that are less than pristine. Also, consider following up with personal references that the applicant gives you, as well as calling the last place the tenant stayed to ask a couple questions to the landlord there.
Oftentimes, the combination of these things will tell you all you need to know about who this person is and if they would be a good fit for your complex.
Be Available To Your Tenants
Owning an apartment complex is going to come with its share of issues. One of these constant issues are going to come straight from the tenants. Tenants are going to come to you with issues of all types to you to handle. And when I mean all types, I mean ALL TYPES. From personal, to professional, to money problems, to relationship problems, to roommate issues, to neighbor issues. You are going to see them all.
And while you don’t have a responsibility or an obligation to be anyone’s psychologist or bartender, you do need to be available for those times where communication needs are legitimate.
The last thing you want to have happen is to have a problem exacerbated because you were unavailable, didn’t check your messages in a timely manner, or didn’t get back to the tenant who had the problem before it got worse. Because if a problem gets worse for them, you can be assured it is going to be worse for you as well.
Simply be accessible to your tenants when they need you. Make sure you have a dedicated phone line that they can reach you at all times, or at least leave a message. And make sure that your voice mail message lets them know when you will get back to them after they leave a message.
Good communication is going to go a long way in both preventing and handling problems as they occur. If the tenant knows they can reach you in a timely manner, they feel safe, secure, and confident in the apartment complex as a whole, and that their concerns are going to be listened to and addressed in a timely manner.
Simply being accessible is going to help retain those tenants you want to retain.
Complete Repairs
Perhaps the biggest gripe of all tenants is that repairs aren’t done in a timely manner.
Many tenants don’t understand the time and money it takes to fix every little problem, but when their toilet isn’t flushing, they aren’t thinking about the 150 other units that the maintenance guy is having to take care of as well.
But there IS a minimum standard of service that you need to give your tenants. Even if you think it is something they can live with and isn’t that big of a deal, you may want to consider fixing what they are complaining about just to help retain them as a tenant.
Remember, you are trying to retain tenants here because the costs of turnover is something you want to all but eliminate. Complete your maintenance requests as soon as time and money allow, and you will have tenants that will stay far beyond their original lease.
Go Easy On Raising The Rent
There are going to be times when you must raise the rent. This is just part of owning an apartment complex, and never the most fun thing in the world to do. You are sure to get complaints from across the board, and it’s hard to explain to your tenants that your cost to keep the complex open went up this past year as well.
Some complexes make it a point to do a small raise each year so the people in each apartment get used to it or are incentivized to sign a lease for more than one year to lock in a price. This can work well in some instances, but if you are really wanting to retain your tenants, especially for a period of time, NOT raising the rent on them is a good way to keep them in your complex.
Even if the period is for 6 months or a year, let them know in a letter that you value them staying with you and if they are willing to sign a lease for a period of another year or half-year, that you won’t raise the rent on them at all.
Many times, this can be all that is needed to keep a tenant right where they are at.
Make Improvements To Your Apartments
All renters want to live in a place that both looks and feels good from the inside out. If there is a part of your complex that doesn’t make the grade, make that a priority to fix or improve.
This can be anything from paint on the outsides of the apartment buildings themselves, or the garages. Making sure the wood or siding is intact and in good shape, replacing whatever needs to be replaced. And making sure the grounds are mowed and kept up looking nice.
You can also consider putting in a couple of charcoal grilling stations and maybe even a gazebo or awning that people can come to congregate in if friends and family come over and make some food and hang out. The same thing goes for a modest playground and equipment for kids to play on.
All of these things show your tenant that you value them and are serious about their happiness at your complex and that you want them to stay.
Offer Good Incentives
You want your tenants to stay. So, give them a reason to stay.
Offer good incentives to them towards the end of their lease if you think you are going to lose some good tenants. Offer them a lower rent, or at least not a rent increase. Maybe a new parking space or garage that is closer to their building.
Your complex is going to have unique issues and features that are unique to it, but giving them some incentives is a great way of keeping those tenants you want to keep.
Respect Your Tenants
Being a landlord is NOT easy. The plethora of problems that they have to deal with on a daily basis is enough to drive anyone mad. But the last thing you want to have happen is that tenants leave simply because of the way you respond to them on an interpersonal basis.
No matter whether the tenant sticks to themselves pretty much 100% of the time, or you are having to deal with them on a regular basis for one thing or another, respecting your tenants, in tone and voice is essential in maintaining a good relationship.
It is never easy to do this, and if you DO have some tenants that are tougher than usual to call you, we have a guide for you on How To Talk To Difficult Tenants. We know exactly how important it is that the landlord maintains a good relationship with the tenant, especially in the eyes of the tenant themselves.
Deal With Problems Quickly
Whether this involves maintenance issues, or noise complaints, or a washing machine has broken down again, it’s important to deal with the problems that tenants give you quickly.
Yes, some are going to be frivolous and not really worth your time addressing at all. But that’s not the point we are making here. We are focused right now on retaining tenants and this means providing a good product in your apartment building, and good service with how you manage it.
If your tenants know that you are going to be on top of whatever problem they bring to you, that satisfaction and confidence that feeling brings has no price tag that could ever be put on it. That intrinsic value that you are bringing them can pay you back dividends down the road.
Stay on top of whatever issues your tenants bring to you, follow up with them on a timely basis, and make sure that the problem doesn’t reoccur. This is what the tenant is looking for in you as a landlord to do. If you fulfill their expectations, they are going to be happy, and happy tenants stay the longest.
Make Your Complex A Community
I have been at apartment complexes where the vast majority of people living there would describe their complex more as a family than anything else. Others I have visited and not a single neighbor says “Hi” to each other in passing and are only shooing each other skeptical looks as they walk out to their car.
The atmosphere of these two complexes is night and day.
And while some people do appreciate their privacy, most also appreciate the fact that they have neighbors that look out for them, a landlord that cares, and that when it comes down to it, people are happy at your complex.
Whether it is having a picnic for your tenants once a year just to say thank you and get some food and drinks together, or maybe you install some grills in common areas around the complex for people to get together on their own. Any attempt at bringing people together in a positive way that is above and beyond what needs to be done is going to be noticed.
Think that a couple hundred dollars is too much to spend to put a charcoal grill pit in? How much is it going to cost you if a tenant leaves, even at the end of his scheduled lease, for another complex that they feel may have the atmosphere they want?
Take these things into consideration, because at the end of the day, you don’t just want tenants in your complex, you want Happy Tenants.
