Finding reliable tenants is a key factor in the success of a rental business. You won't have to worry about residents paying rent late or violating the terms of the lease agreement.
After finding quality tenants to live in your rental property, the subsequent crucial thing property owners should do is encourage lease renewals for existing tenants, and here's how:
1. Rent Discounts
One of the most common lease renewal incentives landlords offer is a rent discount. You can cut a certain percentage off the rent price or set a fixed amount. It's a direct benefit to tenants, as it can lower their expenses, given that financial concerns can deter them from renewing their lease.
Landlords usually deduct 3-5% off the first month's rent after the lease renewal, but you can go higher if you believe that it won't affect your property's income significantly.
You can even offer higher deductions to tenants who opt to renew their lease before it expires, or to those who sign leases for an extended period.
2. Flexible Lease Terms
You can be more lenient with quality renters who go above and beyond to take care of your unit and be flexible with lease terms.
For instance, you can allow tenants with long-term leases to opt for short-term renewal periods. You can also incentivize residents by allowing at least one pet in their unit. In a competitive market, renewal options can provide a competitive edge.
This can significantly contribute to tenant satisfaction and is likely to encourage them to renew their lease. It's better to issue several lease renewals than lose tenants due to the lack of lease duration options.
3. Free Amenities or Services
You can offer exciting apartment renewal incentives such as providing a free month of access to rental property amenities like parking, laundry facilities, gyms, and more.
The period can be either limited or indefinite, or you can decide based on the quality of the tenants. Another tip is to base the free amenity or service on tenant demographics.
Young professionals might appreciate free Wi-Fi more, while families prefer access to laundry units or cable services. This is particularly applicable to multifamily properties.
4. Property Upgrades
While it's not one of the cheapest, it can be the most effective renewal incentive you can offer tenants due to the provided convenience. You can even draft a new lease agreement based on the upgrades you implemented for the new unit.
Some of the upgrades that can enhance their living experience include in-unit laundry, smart thermostats, smart locks that can be accessed with just a smartphone, modern kitchen appliances, new security features, or energy-efficient appliances.
Sometimes, even fresh paint can encourage resident retention. This won't just increase lease renewals, it will also improve your property value. It's a win-win situation, even if you do have to spend money on upgrades, making it a great incentive to consider.
Just be sure to maintain the improvements regularly to keep them in excellent condition, thereby contributing to resident appreciation.
Why is Lease Renewal Better Than Finding New Tenants?
Lease renewals can help you save money by avoiding turnover costs, as well as marketing expenses associated with filling vacancies. With multifamily properties, it can be more costly to have low lease renewal rates; however, tenant loyalty can be a rewarding benefit to your business.
By offering small tokens of gratitude, landlords can foster a positive relationship with current tenants and even help attract new ones.
What are Other Ways I Can Encourage Tenants to Renew Their Leases?
Offering incentives is not the only way to increase lease renewals. Good property management is just as effective.
If you feel overwhelmed managing many tenants, you can always use property management software or hire a multifamily property manager.
Most tenants would appreciate vigilant property management and effective communication more than a cash bonus or ideas for resident events.
While lease extensions or renewals are beneficial for business, ensuring that tenants have a comfortable living space is more important.
Let Area Texas Realty & Management Find and Retain Great Tenants For You
As other matters keep you busy, our team's multifamily marketing professionals can increase the visibility of your listings. We can even conduct thorough tenant screening to find suitable tenants and help you establish competitive rental rates.
Texas Realty & Management possesses the knowledge necessary to manage your business intelligently and in compliance with state and local laws.
By being proactive, attending to maintenance requests, and issuing timely repairs, your tenants will be more likely to renew their leases even before the expiration date.
Let us help you lower your costs and maximize the value of your property. Learn more about our services today and contact us!
