Your property is a business and you need to find the right tenants to ensure you profit from it. Tenant turnover is the period of time when you have a vacant space or unit because a tenant has moved out and the next one is yet to move in.
Having unoccupied spaces means you are losing money. You need to move quickly to get the unit ready for the next renter, but first, you need to review tenant applications.
Screening properly to prevent tenant turnover can be a daunting task. You need to put in place a stricter selection process if you want to land tenants who will take care of your property, pay rent on time and stick around for a long time.
There are some checks that can help you identify the best tenants once you have received applications. To start with, your tenant should meet the following requirements:
- A stable income – Generally, their8 income should be at least three times the rent, or their annual salary is 40 times the amount of the rental fee.
- No criminal record – A tenant with a criminal record may distract neighbors and you might end up losing your tenants. It is better to wait until you find the right tenant.
- A good background history with other landlords – Talk to a previous landlord about the history of the tenant. A current one may not be truthful if the tenant was troublesome. A former landlord will let you know if the tenant skipped out on paying their rent or was destructive.
- A responsible tenant – A tenant might have the required income but has fallen behind with their rent payments or has violated rental policies.
Read on for some tips for handling tenant turnover properly.
Screen Your Tenants Carefully
Review the candidate’s renting history. Drop them once you trace any red flags such as a bad renting history. If that person has a habit of moving from place to place, that is a red flag. You should review their credit history, as well as their employment background.
A pattern should emerge indicating the candidate’s ability to pay rent on time and stay for a considerable length of time. Ask tenants how long they plan to stay so you will know when to re-advertise the unit.
Ensure Your Property Is In Good Condition
If the property is in good condition, tenants will be comfortable and happy to live in your place for a long time. Always ensure the lawn is mowed, the garden is landscaped, the exterior is clean, and any necessary repairs or upgrades are done before the tenant moves in.
You should also contact your tenants directly so as to get feedback on any improvements you can make.
Much as there is rigidity in a written contract once your tenant moves in, a little flexibility might make your relationship better. If your tenants are having a bit of trouble paying rent, allowing them a month or two to get their finances on track might make them stay a lot longer.
Request A Reasonable Notice Period
Tenants are great for business, but they will vacate your property for one reason or another. Indicate the notice period of at least a month on your lease. You should also do an assessment of the property on time to prepare for the exit cleaning process.
Involve the tenant during the inspection to assess the level of damage and determine whether you will need to withhold their deposit to cover for repairs.
Once you have accepted turnover, work swiftly to find new tenants. You can list the property on some of the rental listing websites as soon as you receive a vacation notice. This will allow you a reasonable amount of time to screen new tenants and find one you are satisfied with.
Install new appliances and furniture where necessary, fix everything that needs fixing, and do any necessary paintwork to keep the property looking great and up to date.
Put the right price on the property – Do not overprice the property. Compare market prices and find a reasonable price tag. Putting the price too high will scare tenants away. Find a balance between running a profitable business and remaining competitive in the industry.
Make use of multiple channels – Use classifieds, social media, paid advertising and any other available channels to reach potential tenants. They do hunt on various channels and you want to reach as many people as possible.
If there are several vacant spaces, you can host an open house and this will also give you an opportunity to interact with prospective tenants.
Avoid filler tenants – Rushing through the process will cost you in the long term. While finding a tenant to fill the property fast is important, you should also avoid tenants who will come and go. Finding a new tenant is costly and, as a result, you do not want to constantly advertise and go through the process over and over.
Once you land a tenant:
- Meet the tenant and sign the rental lease – At this stage, clarify any issues that are not clear and respond to any questions the tenant raises.
- Agree on a move-in date – If you still need time to renovate and complete repairs, you can negotiate with the tenant and agree on the date of their move in.
- Collect the security deposit and first month’s rent – After everything has been agreed upon, collect the deposit and rent to complete the transaction.
- Change locks for the new tenant’s peace of mind.
As much as the process of handling tenant turnover may be tedious, it is worth it in the long term. Ultimately, you are running a business and you need to make a profit. A detailed and fair lease agreement will protect you and the tenant, but you should also proactively be involved in ensuring your property is a good home or space for your tenant’s needs.
If your tenants should move out, let it be for reasons beyond your ability.
If you need quality property management advice or you are looking for a new property manager, look no further than LCI Realty. Our quality agents and tenant representation brokers make you and your property a top priority. Contact LCI Realty today.
For more reading like this, check out the last blog post.