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Top five reasons tenants do not renew their leases:
Keeping quality tenants in your property is ideal and good for your cash flow. In fact, the less turnover you have, the better! Quality tenants usually take good care of your property, are not difficult to work with, and most importantly, they pay their rent on time. When it comes time to renew their lease, you expect them to do so, but sometimes they do not. What could possibly cause them to not renew? There are numerous reasons. Let’s examine the top five and see what we can do to keep our tenants from moving:
1) Lack of communication
As in every relationship, communication is key. Communicating with your tenants on a regular basis is important, and is one reason why you should utilize a property manager if you aren't already doing so. It is important for tenants to be able to place maintenance requests easily and to receive important updates in a timely manner. Whether it’s an inspection or when renewal period rolls around, giving notice allows tenants to process the information and make time available for whatever needs to be done. Hawk Mgmt, Inc. strives to keep your tenants informed and to be accessible for their issues at any time.
2) Problematic Neighbors
Unfortunately, this is an issue that may not have anything to do with you, but is a common reason why tenants choose not to renew. Many of us have had experiences with less-than-ideal neighbors. Therefore, it is not that big a surprise if your tenants decide to vacate because of it. Although there is not much you can do about a bad neighbor, you can try talking to the neighbor to resolve any issues. This may help simmer things down and reset their expectations of rentals. Listen to your tenant’s feedback, if they chose not to renew due to crime or negligence, chances are it will happen again with the next tenant.
3) The absence of attention
Tenants want their issues fixed in a timely manner. Even if the issues take longer than anticipated, tenants like to see the effort put forth to correct it. Pushing off their requests without keeping them in the loop or ignoring their issues, is a sure way to upset them and it should not come as a shock to you when they decide not to renew their lease.
4) A steep increase in rent
While raising rent is plausible for industry standards, most tenants do not like the idea of paying more for the property they’ve been living in. Avoid raising the price more than 10% to evade running off quality tenants. When you do raise the rent we recommend to stay in the range of approximately 2-5% a year. Remember that slow steady wins the race!
5) Personal Changes
Life changes happen. It could be a new job, the birth of a baby, a divorce, marriage, etc. Unfortunately, with life events, there isn't much we can do. However, it is good practice to make sure that your lease requires a property 30 day notice because having adequate notice will provide you with more time for you to get your property back on the market with as little turnover time as possible.
The costs associated with a tenant moving out and preparing the unit for a new tenant add up quickly. That is why it is important to treat your tenants well and have a good relationship with them. Remember the golden rule - "Do to others what you want them to do to you" and hopefully you can get them to renew year-after-year.
Should You Hire a Property Manager?
One of the toughest decisions you will have as a landlord is whether to hire a Property Management company or not. There are many landlords who choose to manage their own rental properties, but that is not the right choice for everyone. Sometimes a landlord is just too busy to manage their rental property and sometimes they just lack the knowhow to do it properly. If you are one of these landlords, you should highly consider hiring a professional Property Management firm. Doing so will not only free up your valuable time, but will also help you avoid the many pitfalls in the industry.
You should hire a property manager if:
1) You have better things to do with your time. Managing rental properties takes a lot of time. Consider how much value you place on your own time. Would you rather manage your own properties or relax at the beach, or spend time with your family? Perhaps you can spend your time on your other business/investments and in which you can make a lot more money? Time is money. Use your time doing the things you love or the things that make you more money. Leave the management of your property in the hands of a Property Management firm.
2) You live far away. If you live out of the area, you should strongly consider hiring a local Property Management company to handle your property because they can keep an eye out on the property on a more regular basis for you. Your property is probably one of your bigger investments. Don't you want someone to check on it regularly?
3) You are not a hands-on manager. There are landlords who look forward to finding tenants and maintaining an attractive and safe property on their own. However, if you are not the type to do so you might as well hire a Property Management firm. Managing a property takes a lot of work and a lot of industry-specific knowledge. If you don't know how to properly do so, you could find yourself making costly mistakes.
That said, finding a good Property Management company is not an easy task. Make sure you do your homework and find a Property Management company that will really care about your property as though they own it, or better yet, find a company that will watch your property like a Hawk!
For a free estimate, please call us at (424) 777-9848 or email us at firstname.lastname@example.org.
We look forward to speaking with you!