These are the Reasons You’re Losing Your Tenants
In real estate investing, maximizing cash flow requires focus on several areas. As captain of your ship, you’ll need to minimize costs, maintain and grow rental revenues, and plug the leaks in the hull– including high vacancy rates or high turnover. There are several common reasons why real estate Investors lose tenants.
The rent doesn’t fit their budget
Even while the stock market hits new highs, many renters and families are still struggling to make their budgets work. An opportunity to reduce expenses, perhaps by hundreds of dollars per month, can be enough incentive for tenants to pack it up and move to cheaper rentals. Stay educated on the cost of comparable units both in the immediate neighborhood and in the surrounding areas. Rentals are like any other market, with pricing driven by supply and demand, and it’s possible that rents have gone down in your area due to market pressure. If that’s the case, tenants really can’t be blamed for seeking a better deal.
Communication can keep a good tenant.
Sometimes tenants leave because of uncertainty. They might be expecting an increase in the rent that they can’t afford, or they might be concerned that they’ll be evicted if they’ve fallen behind on the rent a few times. Another landlord or apartment complex offering the first month free or lower rent can be extremely tempting if tenants doubt their longevity with you or feel insecure. Some relationship-building with your tenants can go a long way toward building a solid rapport and help minimize turnover.
Everyone needs some elbow room.
Multigenerational households are increasingly common, and smaller rentals have these tenants bumping into each other and tripping over things when there’s no more room for storage. Many times, tenants leaving are simply moving to a larger space or leaving to rent a single-family home, having outgrown the close quarters of their rental. Communication may save this tenant as well, if you have larger rental units available.
The American Dream is Still Alive.
Interest rates are still low, and rents in some areas can be higher than the mortgage costs of nearby homes if a tenant is willing to add a few minutes to their commute. In this case, it may be that nothing can be done to save this tenant. It’s in their best interest to move on, if they can afford to do so. However, if you have another property that may fit their needs as a home buyer, have that conversation with your tenant. Perhaps there’s an opportunity to turn an idle property into cash and for your tenant to get a great deal on their new home.
It’s the neighbors, or the neighborhood.
Even if your property is well cared for, a jewel within the neighborhood, the neighborhood itself may not be an environment your tenants want for the long term. Within the neighborhood there are also the people living next door or across the street. Sometimes, people just don’t get along. There might also be some activity in the neighborhood that makes tenants fear for their safety or simply feel uncomfortable. We all want to feel safe and enjoy a peaceful environment at our home. If tenants feel uneasy, it’s only natural for them to look elsewhere.
Building a relationship with your tenants can create an open dialogue that makes you aware of issues with neighbors or any other factor that could increase turnover, causing you to lose good tenants. Being proactive by communicating can help you to strengthen your real estate investment business by reducing turnover and vacancies as well as by the referrals that come with being viewed as a landlord who sincerely cares about your tenants.