happy tenants

How Much Do and Should You Value Happy Tenants?
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happy tenantsTenant retention is one of the most cost-effective strategies Chico property managers and rental property owners can implement. Think about it: a good tenant is your unofficial business partner. As long as they’re satisfied with the unit and property, you will benefit from uninterrupted rent payments.

Alternatively, tenant turnover is costly. Recruiting new occupants involves spending money on marketing while losing money on a vacant unit. The profit you lose during the turnover period could be altogether avoided if you focus on retention. By maintaining your property and fostering tenant satisfaction, residents are encouraged to remain in the unit, giving you steady cash flow and maximized profits.

Obstacles to managing a property are expenses largely beyond your control: property maintenance, utilities, property taxes, mortgage payments, insurance, and HOA fees. When modest rent increases are not leaving you with enough profit after paying these bills, an effective way to improve your property’s financial performance is to reduce tenant churn, or the cost of turnover.

By looking at the economics behind tenant retention and applying strategies to reduce turnover you can have a positive impact on your profits, operating budget, and long-term success as a Chico rental property owner.

Tenant Retention: Why Does it Matter?
At the moment, all your units are full (they should be right?). You’re done with your job until you receive a work order for repairs or a tenant moves out, right? Wrong. It’s great to revel in the great feeling of having 100% occupancy, but your job doesn’t end there – now your goal is to convince tenants to stay in your units.

Save time and money. Encouraging residents to stay with you is worth your time because each occupied unit is equal to one less listing to market on Craigslist, a steady stream of rent payments to your account, and so on. The cost and effort that goes into filling a vacancy adds up!
Stop losing money and operate with an optimal budget by retaining tenants. You’ll spend less money and time on marketing and turnover maintenance, which translates to reduced costs and increased income.

Focus on great service. Over 60% of resident turnover is controllable, with staff (or in this case you!) performance the largest determining factor in why a tenant moves out. To reach your tenant retention goal, your residents need to be satisfied with their current living situation. As a Chico property owner, there’s a lot you can do to leverage your service for better retention and occupancy rates. It’s important to be up-to-date on your tenants’ perceptions and concerns. Know where their priorities lie and respond to them with top-notch customer service, since your financial situation depends on their satisfaction.

Retention means greater profit. Studies have shown that on average, a retained resident is worth almost $900 each year on top of rent payments. Each time a resident moves out, a unit is vacant for an average of 1.5 months. If the tenant retains their lease, the property saves $1,350 as well as the additional costs that would go to marketing the
vacancy.

In order to implement a better tenant retention strategy, it’s important to know exactly how much a tenant is worth to your business. This may seem like a daunting task, but in actuality, you already have all the information you need at your fingertips (in your financial records). Read on — we’ll show you how to look at your numbers, and how reducing resident churn will help you put your

balance in the green. Check back for more on this.

Need help? We love Chico Property Management and do it well.