WHY YOU SHOULD FOCUS ON TENANT RETENTION?
The biggest expense a landlord can incur is usually having a vacant property. When you consider getting it rent-ready, the costs of advertising, days on the market, and the monthly mortgage costs you have to pay on the property, it quickly adds up to a huge amount. So when a worthy tenant comes your way, holding on to them should be your drive. Moreover, the current economic situation currently experienced in various parts of the world is putting pressure on commercial and retail property owners, due to the decline in commercial property values. No matter how bustling the location for your property is, retaining your tenant is more cost-effective compared to sourcing for new tenants. At Cardenas Islam, we guide property owners to make decisions that will generate the highest and most sustainable returns effectively. We also help tenants find landlords that will fulfill their end of the bargain. Our goal is to create a win-win situation as it is only in such an environment that tenant retention thrives.
Here are reasons to prioritize renewing with your current tenants over leasing to new tenants:
Turnover is Expensive
Whether you bought your property for the sole purpose of renting it out or the rental phase is due to circumstances, you want to make money. After all, it is an investment. But a vacant property does not earn you money. Instead, it costs you money. The longer it stays vacant, the more money you will spend on it. Therefore, turnover one of the biggest expenses you can incur as a landlord. You still have to pay your mortgage even if you’re running at a loss. It takes time and money to find a tenant. Having found one, it is economically wise to keep the tenant for as long as possible – provided they’re responsible, of course. Cardenas Islam can ensure your property has tenants all year round. As a landlord, you may not have the time it takes to scrutinize the potential tenants that show interest in your property, but if you handle the process with levity, it will cost in the long run.
Renewal Rates and New Lease Rates
Rental rates rely on current market worth. The market, not the landlord determines the worth of your property. Our research at Cardenas Islam reveals that over time, owners that choose to renew with their current tenants had higher increases in rent when compared to those who start from scratch with new clients. Moving is expensive, and if you offer your current tenants a reasonable rate and they’re happy where they’re at, odds are they’ll choose to stay. If they stay, you don’t have to deal with a vacancy period or have to continually reduce your price to attract a new renter.
A vital reason landlords have to make tenant retention a priority is because tenants will be offered a better deal elsewhere. This threat occurs as a result of higher market vacancies and it will incentivize them against renewing their lease agreement as a result. Most times, tenants that are comfortable in their accommodation don't bother to find out if they could have the same satisfaction at a cheaper price. This is because once people feel at home on your property, they develop an emotional connection with it. A tenant's departure on the other hand is likely to create a negative effect on property values. Then there are additional costs associated with the recipient of a new tenant such as the commission payable to property brokers and high installation costs. It is simply more rewarding to accommodate the needs of existing tenants than to gain new ones.
Ease of Operations
Many landlords assume it’ll be difficult to satisfy the demands of existing clients, but this isn’t necessarily the case. Even when it appears that they’re being exceptionally demanding, with professional help, you can still satisfy them without incurring any loss. Cardenas Islam has a team of well-trained and highly experienced property managers who function as a link between landlords and tenants. They know how to satisfy both sides for a sustainable and smooth business relationship.
Landlords who opted for our professional input found that they were paying the most reasonable price for the best service when they assessed their operating costs.
You do not need to make these decisions alone. Contact the Cardenas Islam law group today.