Do you have good tenants who respect your property, communicate about possible issues, and pay their rent on time? You'll want to hold on to them, we assume?
Longer tenancies directly affect your NOI, Net Operating Income. Tenant turnover costs, (aka average cost to replace a resident) with all the renovating, cleaning, re-letting, and void-time, means on average a cost equivalent to 2,5 months of rent for you. And if this happens often and in several housing units – you can do the math, you lose a lot of money. Therefore, the pursuit of longer tenancies does pay off.
But often the length of the tenancy is not really in your hands, is it? Well… yes and no. Yes, your tenants make their own life and living choices. Sometimes they just need a bigger home, or they are relocating to a different city or country.
BUT. The renters of today have very different needs than renters 20 years, or even 10 years ago. If their current living solution is not corresponding to these needs, they can decide to move within their city or district, just to find better value for their rent.
And with value, we are not just talking about shiny walls and beautiful interiors – or the amount of monthly rent.
The Associates Apartment Resident Preferences Report by NMHC/Kingsley (2020) showed, that even though rent is one important factor in why residents choose to discontinue their lease, there is a pool of other factors that affect the decision to stay or leave. And the good news is, that as the property owner you can influence plenty of them.
So let's take a deeper look at the different factors you can use to turn the curve of your tenancy lengths upwards.
Smaller tenant turnover is kind of a synonym for longer tenancies, except that reducing churn brings even more value to you: a 20% decrease in tenant turnover translates to a 25% increase in the average tenancy length.
And when it happens that your tenants decide to move elsewhere, it is critical that you know why it happens. Therefore conducting exit interviews with tenants who move out can be an invaluable gold mine for you: you can hear directly what was the cause for them moving out. And if the reason has been something that you can affect – change it. Now. Immediately.
Go already, action.
Residents are happier in living spaces that are well looked after. By taking good care of general maintenance and building up-keep you make your housing units places where people want to live, where they enjoy living in – and which they want to take good care of.
It is important to be aware of the condition of buildings and carry out necessary repairs, repainting and other maintenance work on time. This is first and foremost for the safety and lifetime of the building but also purely for its appearance.
Also, a regularly and professionally cleaned building is more pleasant for its occupants and also encourages them to participate in keeping it tidy. But with litter and dust balls floating in corners and no one washing the splashes off the walls, you can imagine that the effect is quite the opposite.
Our lives circulate more and more around our homes. We don’t just live there, but we also often work there. At the same time, the sharing economy is emerging like a rocket. People no longer need to own everything, they are more than happy to share.
How can you apply this to your property? For example: make sure to offer clean and working laundry rooms in the building. Offer a shared co-working space, play areas for children, a selection of outdoor toys and games, or a common gym and pool for the residents. Amenities can be also things like a couch cleaner, that the tenants can rent when needed (but what nobody wants to own and store in their own apartment).
By ensuring relevant amenities you make life easier for your tenants, and by doing this you lift the threshold for them to move elsewhere. Why move, when things are so simple and easy here?
To figure out which amenities are the most critical and wanted, you should not just guess. Ask your tenants for feedback or make a survey. The easiest way to do it is with a digital tool – which also adds to the modern living experience and affects the tenancy lengths (read more in point 9 of this article.)
All the material points above are important, but there’s something even more important that you should not ignore. That is how the residents feel in their building. Do they feel connected, and do they find it meaningful to live there? Today's tenant is looking for, consciously or not, a community to belong to.
Based on studies, community management has been proven to be one of the most important factors in the tenancy length, both in Europe and in the US. People are longing for that connection and a sense of belonging. And where else would it matter more than in your own living environment, where you spend so much time?
Building a community is all about the right kind of property management. About your way of communicating with the tenants, providing the right kind of amenities and bringing people together through social events where they can meet and which they can talk about when they meet in the hallway or in the elevator.
Digital tools are today’s key for community building. You can create digital space for your tenants to connect, discuss, find like-minded neighbours and plan events of their own, too.
Check the point 9 in the article, and read more about how to build a community.
Through building communities you create that feeling of belonging. But you also do another very important thing to increase the length of the tenancies: you connect the tenants to each other.
It has been researched that there is a direct link between the number of friendships a resident has in the community and their likelihood to renew their lease. Even one friend in the building can raise the intent to renew the lease to 38%, and the chances grow as high as 47 % among those with seven or more friends in the building.
One reason for discontinuing the lease is poor property management. This can include of course the maintenance of the property, but often it also has to do simply with communication. Tenants might feel that they are not well informed about things that they should know about and that they cannot get their message through to the landlord.
Clear, transparent and responsive communication increases tenants' trust in the landlord and makes them feel better informed and listened to.
You might think that all this takes an excessive amount of time and is not worth it. Maybe it was the case before – but with digital technology, all the communication can happen on one platform, whether you need to send one-to-one or one-to-many messages.
When tenants feel safe and secure, they are more likely to want to continue their leases. And it is your responsibility to make sure that the properties are and feel safe. This includes for instance:
We all know that bureaucracy and paperwork can sometimes be a real pain. Finding documents, signing documents, and sending them back and forth via email. Nobody needs more of that. Today there is an easy fix for that issue, which not only eases your tenants' lives but also saves a lot of time for your property manager.
You can ease the bureaucracy related to the tenancy from the beginning by handling everything with a digital app starting from signing the lease online – without having to send a single piece of paper back and forth.
A digital tenant app can also include an entire FAQ section where the tenant can easily find all the practical information about the building, such as:
It is also a huge time-saver for your property manager, not having to send every requested document individually to each tenant one at a time.
Modern tenant experience means digital and automated living experience. Today’s tenants expect that they can handle everything digitally – and they are right.
Why use old-fashioned bulletin boards and emails when you can send all the relevant information directly to your tenants' app in their pockets? Why use keys when you can have door codes and other smart technology? Yeah, we don’t have an answer to that one.
Instead, we have developed a digital tool for modern properties, modern property owners and modern tenants. Learn how to offer modern living experience with Hococo TRM.
Today’s tenants are more and more searching for like-minded communities. When you know what kind of community you have, use this knowledge to find the right tenants that fit your property.
(And how you know? With data from surveys, feedback and Tenant Relationship Management system.)
You can create a list of questions for potential tenants to screen how well they would fit into the building. New tenants who fit the spirit of the unit are more likely to stay longer. Screening also helps to find the most reliable tenants who respect the building and its other residents.
Greater tenant satisfaction leads to better tenant retention. For you it means longer tenancies and steady revenue for more prolonged periods and fewer costs related to the tenant turnover. All this leads to higher profits, which you can also invest to make your housing units even more attractive places to live in.
Happy and satisfied tenants have fewer reasons to move elsewhere, so as long as you keep actively improving your tenant satisfaction, you are actively extending the length of your tenancies. Most of the points in this article have a direct impact on tenant satisfaction.
We also have a blog post about tenant satisfaction and a whole series of guides coming up on the topic, which you should check out to get a better hang of the tools and possibilities there.
Guessing is a bad idea and can lead to wrong, expensive investments. Don't go all out for a pool area if what residents would most like are communal dining and a functioning laundry room.
It is crucial to listen to your tenants and use their feedback to plan improvements that they will appreciate. To get you started with measuring your tenants’ satisfaction and listening to their needs, we've created a ready-made survey, which you can find here, in the tenant satisfaction blog post.
Signing up to our newsletter you also secure the tenant satisfaction guides in your email during the autumn. The guides will teach you how to continuously measure your tenant satisfaction, NPS and CSAT – in other words, how to follow up on the effects of your improvements.
Understanding your residents’ needs and the level of their satisfaction can be time-consuming without any digital help. Building a community can be almost impossible without digital tools to support it. Not to even mention the streamlining of the communication processes with your tenants.
We therefore suggest that you familiarise yourself with our Tenant Relationship Management (TRM) system. It is an all-in-one service and communication platform that we’ve built to transform the way real estate professionals engage, operate and nurture resident relationships.