Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].
Question from Ashley in CO. Hello Brian, I’ve been a landlord for almost 20 years and I’m a little embarrassed asking about this. I have seven house rentals and my tenant turnover rate is much higher than I would like. Two of my tenants moved out in November when their leases expired, and a month-to-month tenant gave me notice this week when I told her that the rent would be increasing in January. I’m about to turn 58 and hope to retire in the next couple of years with a passive income from my rental properties. Right now, it’s not feeling like passive income. These were all good tenants that paid the rent on time and kept a nice tidy home and yard. I have new tenants moving into the first two vacancies but now I have to work on finding another tenant for the third vacancy in two months. It’s not horribly expensive qualifying a new tenant but it does take quite a bit of my time. The biggest expense is giving the house a thorough cleaning and doing some touch up between tenants. I’m not making any renovations, but it does take time and cost some money. Where more of my time goes is advertising the vacancy, showing the property, and screening tenants. I expect to show my current vacancy to at least four people before one submits an acceptable application. If the background check comes back clean, I’ll spend several hours making calls to check references with employers and previous landlords and wait for return calls that often don’t come without me making follow-up calls. It’s only after everything checks out and the tenants move in that I’ll learn if I’ve approved a good tenant in a few months. What should I be doing to encourage good tenants to stay in place so that I feel more comfortable as I get close to retirement?
Answer: Hello Ashley. In my humble opinion, it's little things that make people respect you and want to stay. As a landlord, you will have turnover but three out of seven in two months is certainly alarming. If I understand your note correctly, they are all leaving after you increased the rent. You should ask yourself why that is? Are your rent increases unreasonable? Have parts of the property like carpets and appliances deteriorated? Do you have good relationships with your tenants? There could be other reasons, but these are among the most common for renters to bolt when the rent is increased.
Ashley, start by taking an objective look at if you are offering a superior rental house at a competitive price. And here are other best practices for landlords:
Ashley, I think the best suggestion I can make is to remember that your customers are people just like you. If you screen them carefully and follow these recommendations, you’ll have done the most important things possible to ensure your peaceful retirement and your tenants’ satisfaction.
What advice can you give Ashley and other landlords to retain good tenants? Please comment.
Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].