If a tenant is unhappy, there is little you can do to change their mind. If the unit is too small for them, the neighborhood too rough, they want to purchase a home or they are relocating; people sometimes need a fresh start. But if you like them and you think the problem is you or something you aren’t doing, you can make a change to remedy the situation. Here are a few things you may want to consider when asking the tenant to stay another year:
Keeping the same rent: If rents are close to market value, why risk losing a good tenant over $25-$50 a month?
When bringing it up to the tenant, say “Hey, I would like to know if you plan to stay for an additional year at 123 Main Street. If you stay, we will not increase the rent for this term since you have been such a good tenant and have taken such good care of our property. Please think it over and let me know!”
Just by conveying the thought that you have considered increasing their rent sews a seed of doubt that they can find a cheaper apartment. Don’t risk losing a good tenant who pays on time over a few extra bucks a month. Believe me; the hassle is not worth the money; it will most likely cost you more in vacancy costs than it would have made you in extra rent.
Offer an improvement: I know we have mentioned this in a previous post, but I want to touch on it again because it is something that we think to be a good use of your reserve money. First, it shows the tenant you care about them and the property. Second, it pleases the tenant to have a new bathroom floor, new carpet, newly painted room, or whatever you decide to give to them as a bonus. Third, it improves your property while the tenants are still living there, saving you from having to update it all at once when they move out. Blast Tip: Make sure you talk it over with the tenant and make them a part of the decision-making-process. This is “their home” too and they should have some input on the improvement. Going this extra step will make them more invested in the home, giving them incentive to stay.
Keep a close, but distant relationship: As a landlord, you usually don’t want to be bothered and neither does your tenant. If a tenant doesn’t contact you often, that is a good thing, but don’t be afraid to reach out to them periodically to see how they are doing. Try and remember something personal about them and ask them about it; "How is little Tommy and Megan?" "How was your recent trip to San Diego?" "How is the bakery(work) treating you?" This will show them you care, while making sure the house didn’t burn down. A quick text once a month solves this and the conversation shouldn’t last long. If they contact you, you don’t need to take this extra step. Use your best judgement.
Be attentive: Take care of tenant’s requests in a timely manner. Within reason, you should know your responsibility as a landlord and if there is an issue that is your responsibility, you should handle it as soon as possible. This shows that you are attentive. Tenants appreciate that and are more likely to stay if they know you solve problems and don’t let them linger.
What if I don’t like my tenant?
Bad tenants can be inherited when you buy the property OR you can make the mistake of agreeing to their tenancy. Sometimes they might look qualified on paper, but turn out to be disastrous. You can help to avoid the latter by reading our previous blog, “Effectively Screening a Tenant as a Landlord.” Whatever the reason, here are some strategies to make them want to move on without actually kicking them out:
Upping the rent: Before you come up with a new price, take into consideration the fair market rent for your unit. You cannot give them a far-fetched number because if they take you to court, the court will most likely vote in their favor. A month or so before their lease is up, hit them with how much you plan to charge for your unit on the next year lease. Depending on the situation, they will do one of three things: 1) Pay you what you asked for; 2) Put up a fight about it; 3) Leave knowing that they can’t afford that amount. This is a risky move, but if they agree to pay the inflated price, at least you’re getting more money each month for putting up with the hassle. The worst-case is number 2--but give them a lease to sign, and if they disagree, you can begin the eviction process. In our opinion, if they aren’t living there contractually, they shouldn’t be living there at all.
Not resigning the lease and beginning the eviction process: Before evicting a tenant, ask nicely first. Tell the tenant that you would like to renovate the unit and charge more for rent; ask them if they would move out. Give them a month to find a new place to live; make sure you have in writing that you gave them this notice and have them sign it. If they say no, have an attorney issue them an eviction notice. Make sure during this time you do not cash any of their checks; if you do, that buys them a whole month or more to stay. By not accepting their money, it shows that they are not paying their rent and gives you justification to kick them out. (Note: We aren't attorneys, nothing here is legal advice; you probably can't evict for no reason, so make sure you have a legal reason to do so)
Offering incentive to leave: We have never done this ourselves, but if you offer a discount on the last month’s rent or offer to pay for the moving van, this type of gesture may go a long way. Moving can be a difficult thing to do, especially if they have lived there long. It can also be expensive. If you ask the tenant nicely to move and offer them some sort of a bonus, they will be more receptive to the idea. You might offer to help them find a new place. Again, don’t make this offer blindly, either get it in writing or don’t “pay” them until they are out.
If you have a good tenant, fight to keep them; if you have a bad tenant, take steps to replace them with a good tenant. If you want to invest in rental property, but don’t want to deal with any of the hassle, contact us and we can help! Owning property can be fun and fulfilling, but the hassles that come with it can be discouraging. If you have any questions or are interested in putting your hard earned money into something bigger, don’t hesitate to let Blast REI help you in your financial endeavors. We have proven techniques for buying cash flowing property in a market we know and trust!
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