Tenant turnover in rentals refers to the period when a tenant moves out, marking the start of a unit’s vacancy. Here, landlords go through a tedious process of preparing their rental unit with the hopes of finding a new tenant soon. Otherwise, the property will remain vacant, resulting in a loss of rental income. This begs the question, what exactly drives tenant turnover in rentals? Common reasons include poor management, unexpected rent increases, and the like. To give you a better idea, let’s cover what tenant turnovers are, why they happen, and how you can minimize the chances of lease non-renewals for your rental property.
Key Takeaways
- Tenant turnover in rentals costs landlords temporary rental income loss, repair and maintenance expenses, and marketing fees.
- Common reasons for tenant turnover include rent increases, poor communication, and lackluster management practices that lead to tenant dissatisfaction.
- Addressing the causes of tenant turnover in rentals through efficient operations, streamlined communication, and better property maintenance can greatly influence tenant retention.
What Is Tenant Turnover in Rentals?
The best property management companies know that tenant turnover is a critical stage in the rental process. It happens when an existing lease ends, and you’re in the process of finding and welcoming a new one. This transition involves several key steps – facilitating the move-out process, repairing the rental unit, marketing the property, screening applicants, and finally turning the property over to the new tenants.
But why is this important? Well, it’s because tenant turnover in rentals signals a potentially vulnerable period for a rental property business, where a unit is about to sit vacant. This means a temporary loss of income. Additionally, you face extra expenses for making sure the unit is rent-ready and for marketing to find a new tenant. This is what makes tenant turnovers particularly challenging and risky for landlords.
Most Common Causes of Tenant Turnover in Rentals
To better understand what a tenant turnover in rentals is, let’s look at some of the most common reasons why a renter decides to move on.
- Rent Increases: Significant or frequent rent price hikes can push tenants to move to find more affordable housing options.
- Poor Maintenance Response: Late or lacking proper maintenance can make tenants feel frustrated, unheard, and dissatisfied with the way their landlord handles safety and habitability concerns.
- Lack of Communication: Having an unresponsive landlord or a lack of transparency can lead to a poor landlord-tenant relationship.
- Property Condition or Amenities: An outdated or poorly maintained rental property can make tenants feel unsafe and uncomfortable. Similarly, the lack of amenities (laundry, park, gym, playground, etc.) will have tenants looking elsewhere for more.
- Neighborhood or Market Shifts: Shifts in the market, such as lower rent prices and job openings elsewhere, may encourage a tenant to move for better opportunities.
How to Reduce Tenant Turnover
More than knowing the most common reasons for a tenant’s turnover, it’s even more important to learn about the different ways a landlord can effectively minimize the chance of non-renewals. While some turnovers are unavoidable, you can take steps to protect your rental property from unnecessary and unwanted vacancies. With that, here are some proven and tested strategies for reducing tenant turnover in rentals, including:
- Improve Response Times
- Conduct Renewal Check-Ins
- Offer Small Renewal Incentives
- Perform Annual Property Evaluations
- Maintain Competitive Pricing
Improve Response Times
For landlords, one of the most effective and simplest ways to encourage tenants to stay is to establish a positive landlord-tenant relationship. To do this, communication is key. If a tenant knows that they are in good hands and can rely on their landlord to respond to their inquiries, needs, and concerns in a timely manner, this contributes to a positive rental experience. On the flip side, having an unresponsive landlord who doesn’t show a sense of urgency in addressing tenants can influence their decision to leave.
But how do you improve response times exactly? First, you can open multiple lines of communication for your tenant to reach you (or your property manager). More so, be transparent with your tenant in addressing concerns, as this will help establish clear expectations for all involved.
Conduct Renewal Check-Ins
Typically, your tenant is required to give notice on whether they want to renew their lease a month or two before (depending on the lease agreement). Now, if you want to take a more on-the-ground role in reducing tenant turnovers, conducting check-ins ahead of the lease’s expiration can help you gauge where your tenants are in terms of renewing their contract. In case they have second thoughts, this check-in will give you enough time to address their concerns. Doing so can help improve the chances of them staying for another full-term lease.
Offer Small Renewal Incentives
In some cases, attaching perks or incentives to lease renewals and extensions can easily spell the difference between continuous cash flow and potential rental vacancy. Think of it as a reward for their loyalty if they do decide to renew their contract. This strategy also furthers the tenant-landlord relationship by showing recognition and appreciation for their confidence in your rental property.
Perform Annual Property Evaluations
Another way to understand tenant turnover in rentals is to assess your property’s condition and determine areas that require repair or possible points of improvement. Conduct a periodic (at least once a year) inspection and evaluation of the current state of your rental business. Doing this can help you identify issues, big or small, that could contribute to a tenant’s dissatisfaction.
Maintain Competitive Pricing
With over 21 million households rent burdened across the country, rent pricing has always been a critical factor that dictates a tenant’s renewal decision. Simply, if your tenant can no longer afford rent comfortably, then they are most likely to move. That is why any form of rent price hike must be considered and planned carefully.
Now, to prevent excessive rent increases, always refer back to the local housing market. Compare similar properties and make sure that you’re never too high or too low from the average rent. Otherwise, you put yourself at risk of longer vacancies.
Partner With BMG For Your Property Management Needs
Tenant turnover in rentals poses a real challenge for landlords. If you want to prevent them and encourage renewals instead, then it’s critical that you tend to your tenant’s needs. The level of tenant satisfaction, through the quality of your property, your service, and management, can greatly influence their decision to leave or stay. Now, this is where partnering with a property management company, like us at BMG, can make a huge difference. With our services specifically designed to provide quality tenant experiences, along with streamlining rental operations, landlords can encourage lease renewals and fewer vacancies. Sounds interesting? Contact us and let’s explore your property management needs.
