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:

1. Don't overcharge. Weigh the cost-benefit of rent increases. If your tenants have an excellent payment history and take good care of the property, not raising the rent may be more financially advantageous than raising it. You’re going to lose at least two weeks of rent along with the time and cost associated with finding a new tenant. It could be a month without rent. Is it worth losing $1,100 in rent for a $55 rent increase?
2. Don't bother them unnecessarily. People rent single-family houses rather than apartments because the house feels like it’s their home.
3. Encourage them to report problems that need attention but also schedule at least annual inspections to look for issues in the house that need to be fixed. Tenants don’t always recognize that something needs attention.
4. One of the most important is promptly responding to any phone calls, emails, texts, etc. that you receive from your tenants.
5. When you get a call that something needs to be repaired, have the repair made promptly. Tenants feel valued when you promptly respond to their needs, and they are more likely to care for the home when they see that you do too.
6. It’s a good idea to have a regular schedule for replacing items like carpet, appliances, and fresh paint that deteriorates from wear and tear. Instead of waiting for problems, replace these every five to seven years. Replacing them a few months before you expect to raise the rent is a better strategy than waiting for the house to be vacant to make the upgrades.
7. Let your good tenants know that you value them. This can be as small as a Christmas card or something a little more substantial like a $100 gift card for every six months that the rent is paid on time. It can be even more substantial like offering free lawn care if they renew an expiring lease (especially if there will be a rent increase). An unexpected gesture can go a long way toward encouraging tenant loyalty.

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].

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Brian Kline

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News

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