If you’ve been a property manager for long enough, you’ve inevitably had an experience where you have a good tenant — things seem to be going fine — and then they surprise you by not renewing their lease. We all know that in essence, residents are our business partners-aside from being costly; these situations are confusing. What makes these residents leave?
Residents fail to renew their leases for particular reasons, but some are more common than others. Let’s discuss a few of these grounds:
1. Changes in Personal Situation
In many cases, a tenant’s situation may merely change. Maybe they’ve changed jobs, recently expanded their family, or are moving away to be close to a significant other. There’s nothing you can do about these highly personal situations, which often sneak up with minimal warning.
2. An Expensive Rent Hike
Are you enacting an increase in rent? Even if it’s merely to keep up with the going rate, many residents don’t like the idea of increasing a rent payment for the same property. For some reason, they’d instead switch properties and pay more. Psychologically, a new place seems to better justify the price increase.
If you have to raise the rent-do it with finesse so over time. Raising your rent by more than 10 percent is a surefire way to lose even your most loyal renters. If your rent is significantly below market value, tell your residents. Then, gradually raise the rent in increments each year and/or use a 3rd party biller. Raising rent 2–3 percent here and there will have a much less noticeable effect depending on community demographics.
3. Poor Attention to Detail
Sometimes residents get tired of dealing with a lack of attentiveness. While they understand that issues happen, they want to see you put forth the proper effort to correct them. For example and hypothetically, if the air conditioning goes out on a Friday afternoon in July, they want you to make as many calls as you can to get someone out there right away. Waiting until Monday and forcing them to suffer through the miserable heat won’t win you any bonus points.
4. Lack of Communication
This one goes hand-in-hand with the last point; lack of communication is a significant cause of turnover. Not only do you have to communicate regularly with your residents about things like maintenance, but you also need to speak with them about renewal well in advance to give them time to process things like rate increases or changes in lease terms.
5. Lack of Trust
What have you done to establish trust and rapport with your residents? Do they feel like they can be upfront and honest with you? — Alternatively, do they sense that your only purpose is making money? Residents want to be treated with transparency.
6. Problems With Neighbors
As we all know, bad neighbors can make for a miserable housing experience. Nobody wants loud, intrusive neighbors. If you have rough neighbors around, don’t be surprised when your residents take a hike.
The Cost of Turnover
We are talking about all of the processes and costs involved in moving a tenant out of an apartment, turning it up, and moving another resident in. These include administrative costs, advertising, showing the property, application costs, repair expenses, and, of course, lost income.
While we can’t retain 100 percent of our residents, we can make sure that we’re aware of the common causes of turnover so that you don’t do yourself a disservice.