Fewer tasks are more frustrating for a landlord than finding new tenants. When a vacancy arises in your rental property, a set of responsibilities are triggered, including marketing, tenant screening, and lease administration.
With that in mind, it's not hard to see why any rental property owner in Phoenix would be interested in getting more lease renewals from existing tenants. There's a problem, though. Your tenants might not be interested in extending their leases.
Letting them go isn't ideal for you, so what are your options? Tenants can always leave at their own will, but there are strategies you can implement to enhance tenant retention.
Here are a few of them.
1. Avoid Month-to-Month Leases
Some landlords prefer short-term or month-to-month lease agreements because they offer some flexibility in case a tenant eviction is needed. However, such leases don't foster retention.
With a month-to-month lease, for example, a new tenant will have every reason to move out after the first month of tenancy should they be displeased with your services. They don't risk getting sued by the landlord for the costs of re-renting the property because no lease has been broken.
Long-term leases (at least one year) prevent such instances. If a tenant is displeased with the landlord soon after moving in, they'll be more inclined to get the issues addressed than break the lease and risk getting sued.
2. Start Lease Extension Negotiations Early
When a tenant is approaching the expiry of the rental lease, they're naturally thinking about their options. If an option to renew isn't in the agreement, they might even be preparing to move out.
This is also the best time to approach them to offer lease extension advice. If you'd like them to renew the lease, encourage them to consider doing so at least two or three months before expiry. Although they're at liberty to not make a decision until the expiry of the lease, indicating an intention to negotiate can get them to act.
Even if they're not going to renew, you'll have advance information, and you can start preparing to list the property.
3. Offer Incentives for Rental Renewals
Tenants in Phoenix have choices, seeing that the current rental vacancy rate is about 8%. Don't expect your tenants to renew their leases simply because they cannot find a similar or even better unit.
So, when it's time to negotiate for a lease extension, don't go empty-handed. Give your tenant something to think about.
For example, if rental prices are going up in the market, the tenant might be expecting you to raise their rent. In this case, freezing any rental increase for the duration of the new lease can be an attractive renewal incentive.
Other ideal incentives include a free month of rent, rent discounts, and free property upgrades.
Lock-in Those Lease Renewals
These strategies for lease renewals have a good success rate, but you must know how to implement them effectively. If that sounds like too much work, all is not lost. You can turn to professionals for the help you need.
At LHM Realty, we're keen to enhance tenant retention through the delivery of satisfactory property management services. With our years of experience and vast network of contractor partnerships in the Phoenix Metro Area, you can count on us to deliver.
Get in touch to learn more about our services.
