Any residence with two or more units in the same building is referred to as a multi-family property or multi-dwelling unit (MDU). This kind of home comes in various structures, including the,
8 Proven Tips To Maximize Your Rental Turnovers
Dated: July 16 2020
Rental turnovers are not only time-consuming but also capital-intensive for investors. This is why investors lookout for ways to reduce their turnover rate to maximize the return on investments. This post offers proven tips that can help you to improve your earnings with less work on your rentals.
Let's check them out.
Tip 1 – Prioritize potential long-term renters.
Some short-term tenants probably want to stay for just a year. Likewise, we have long-term tenants looking to stay for up to ten years in a rental property. Your rental property will be better off with the latter set of renters. How do you identify them? Start by checking their job and house history. If you have to, reach out to their previous landlords and current employer to verify the information they have provided. A look at their financial history and credit reports will also offer some valuable insights. For instance, you can see how consistent they are with sorting their bills and expenses? It will show if they can comfortably afford the current rent for multiple years. You can also see if they can afford a slightly higher rent – if you increase the rent in the coming years.
Tip 2 – Know and work with your market rents.
The importance of pricing the rent right in a rental property cannot be overemphasized. Over-charging is usually counterproductive – you will end up chasing all the good tenants away. Likewise, undercharging will adversely affect your ROI. Pro Tip – Offer a discount on the rent you are charging. It does not have to be a huge discount. For instance, if the normal market rent is $2,000, you can include $1950 in your adverts. Although the discount is quite small, its presence is what usually appeals to the potential tenants. You should add the reason you are offering a discount. For instance, you may include a note in the advert that the discount is only applicable to renters that can ensure proper maintenance of the outdoor area.
Tip 3 – Increase the rent gradually and consistently.
Contrary to popular view, small increments in rent do not chase renters away. Why? Everyone knows how rent works – it increases gradually by the year, the same way tax and insurance increases. Yes, the increments are little, but they sure exist! This is why you should make the small increments consistent – every year – rather than waiting for a couple of years before introducing a considerable increase. This move ends up unsettling the renters, who probably expected the rent to remain as it is. Inform your tenants of a possible but gradual rent hike right from the start. That way, your tenants will be prepared for potential increments whenever it is time to renew the lease. It is essential always to keep your tenants in the loop. Not doing this puts you at the risk of losing them, as they may consider your sudden increments shocking and inconsiderate.
Tip 4 - Offer rewards for referrals.
Word of mouth is a viable advertising tool in the real estate market. So, if you own multifamily homes or multiple rental properties around the same area, you should encourage your tenants to convince their friends to move to the neighborhood. It is always an exciting idea to stay close to your friends. Your tenants know this and will probably want to convince their friends or family to come around. To spice things up, introduce some form of incentives or rewards for successful referrals. However, such rewards should only be limited to your tenants, lest it appears a "bribe" to the incoming tenants or a means of 'forcing' them to join the bandwagon. This, if done right, can help you to build a community of friends among your tenants. It is beneficial for you – great relationships among tenants means little or no problems for the landlord.
Tip 5 – Choose regular improvements over dream improvements.
You will need to improve and update your rental property with time. It is common to see landlords making huge improvements only when they are looking for new tenants. This works but not as effective as making regular updates to properties. The latter helps to keep existing tenants – the regular improvements will convince them to stay put and pay the little extra you are asking in rent. This even gets better when you involve your tenants. Ask them for their inputs on what they consider the "necessary or important improvements." When you do this, it shows that you are invested in their comfort and see them as an integral part of your business. However, be careful not to make any promises while at it. Just seek for their inputs. Now, before you adopt any of their suggestions, it should be in your property's best interest of your property. You do not want to make a major change that incoming tenants will not find beneficial if the current crop of tenants ends up leaving. Also, will the improvements be enough grounds to demand increased rent for your rental property?
Tip 6 – Be cordial with your tenants.
If you have a smooth tenant-landlord relationship with your renters, chances are they will stay longer. The best part is that this requires only minimal effort. Here are some heads up: Follow every written notice up with a phone call to get their reactions. Although the law only stipulates that you inform them of your prior visit via a written notice, the courtesy call makes you a good property manager. You can also place a courtesy call as a reminder of an upcoming lease renewal. If you are planning to increase the rent, seize the opportunity to discuss why this is necessary. You may also ask if they would be leaving the property or renewing the lease. These courtesy calls do not have to be too long – but not too short either. Anything longer than a minute is fine. Away from phone calls, you can also try to make them know a bit about you. Creating a personal connection with your tenants will make them 'feel at home,' rather than just customers.
Tip 7 – Be there at all times.
Tenants love it when their landlord is present when needed, especially during emergencies. Your prompt responses will also help you to cut costs on repairs since you get things fixed faster before they degenerate into more serious problems. Always stay in touch with your tenants if you have an ongoing renovation or similar issues at your property. You can do this via phone calls or text messages. It shows that you have them in mind and working hard to make them comfortable. If there are contractor schedules or status updates, ensure you notify your tenants in advance. Knowing these will help them to make necessary adjustments and preparations.
Tip 8 – Know when to set problematic tenants free.
Prompt payment of rent is not the only yardstick to determine a good tenant. Sometimes, a tenant may pay on time and yet cause other problems. You do not want to keep a problematic tenant for any reason – they end up chasing the good tenants away. Dealing with problematic tenants is stressful for you as a landlord and detrimental to your image and may hurt your real estate ambitions.
In addition to these eight tips, it is also vital that you adopt a sound management approach plus a low-maintenance strategy. These will help you to keep tenants for as long as possible. You do not want to spend all your energy and time on tenant management, turnover issues, and screening, instead of cashing out checks at the end of the month.
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