We can explain how effective management minimizes turnover in LA’s rental market, including fostering tenant loyalty and providing amenities that encourage long-term leases.
Tenant turnover is one of the biggest challenges Los Angeles property managers face. But when you look at some of the most desirable low-vacancy properties, they all have one thing in common: great property management.
By some estimates, turnover costs can range from $ 3,000 to $ 7,000 per unit (source), factoring in lost rental income while the unit is vacant, cleaning, repairs, updates, marketing, screening, and administrative fees.
Obviously, keeping those units occupied is the goal, but that’s not always realistic. People move on, markets change, and the rental market is highly competitive. It’s a rare occasion when you can move a new tenant in immediately after one vacates, and in many cases, the work required often exceeds initial estimates.
So, while you can’t bank on your good tenants staying forever, a solid retention strategy goes a long way in avoiding or at least mitigating the inevitable costs and disruption.
Why Tenant Retention is Important
Properties with high tenant retention are more profitable, period. But what’s a reasonable retention rate? What can you expect in Los Angeles?
Every neighborhood is different, so it’s challenging to set a standard to strive for. But for the sake of argument, let’s shoot for 70 to 90% as an ideal. This means that 7-9 out of 10 tenants renew their leases, indicating that tenants are generally satisfied with the property and its management.
A high retention rate means you’re doing something very well. Here are a few factors that contribute to tenant satisfaction:
- Clear communication
- Responsiveness to feedback
- Proactive maintenance
- Lease renewal incentives
- Attractive amenities
- Fair rental rates
- Safety and security
- Community
- Compliance with state and local tenancy ordinances
But when it comes right down to it, all the amenities in the world won’t make a difference if the property management is lacking.
Bottom line, tenant retention is all about relationships. Los Angeles is a unique city for renters. Many tenants come here temporarily to prospect their careers, not knowing how long they’ll stay. Making your property as much like home as possible and prioritizing tenant happiness are two key factors that may help convince them to stay.
Of course, the weather and lifestyle always work in your favor, so fleshing out things on the home front helps to keep it wrapped.
An LA Property Manager’s Top Tips for Tenant Retention
There is a reason some properties have low vacancy rates. In most cases, it’s because their property management places a high value on tenant retention. To maximize retention, most recommend a tried-and-true combination of services, strong tenant relationships, and proactive management.
Let’s break it down and flesh it out.
1. See tenants as residents-not just renters.
Choosing to refer to your tenants as residents rather than renters shifts the perspective, adding value and respect to their choices. When you treat people with respect, they respond in kind and are more likely to feel a sense of belonging.
2. Offer built-in value-added services.
Amenities are great, but consider adding services that enhance their daily lives. Some examples include move-in concierge services, package hold services, package lockers, bike lockers, EV charging stations, physical security guards, fitness classes, and doggie day care. Ultimately, your tenants will let you know what they want; listen to their suggestions, and you’ll know what to do.
3. Stay on top of maintenance requests.
Nothing is more frustrating than delayed repairs or maintenance. Keeping the property well-maintained can reduce the need for repairs; however, when they do arise, be prepared to respond immediately with a plan.
4. Place a high value on safety and security.
Investing in state-of-the-art security systems ensures your residents always feel safe at home. Ring doorbells, entryway security, secured parking, cameras, and a staffed command center prevent unauthorized entry and provide peace of mind.
5. Offer business-grade internet.
Connectivity is essential in fast-paced Los Angeles. Internet outages could mean missed opportunities or lost time when working remotely. Business-grade internet is not only faster and more secure, but it’s also more reliable, reducing potential downtime by 99.999% or more.
6. Keep units and common areas up-to-date and well-maintained.
Updated units and well-maintained common areas with modern amenities will ensure your property is aligned with today’s trends. Updated appliances, kitchens, and bathrooms, high-efficiency windows and doors, smart tech, solar power, and overall energy efficiency help keep costs down, increase property value, and align with a highly desirable living experience.
7. Offer digital convenience.
A digital experience provides your residents with unparalleled convenience. SMS messaging, online rent payments, virtual property tours, and 24/7 maintenance requests offer ways for you to manage the property more effectively and provide residents with ways to manage their tenancy online.
8. Prioritize tenant screening.
Part of feeling like you’re home is that inimitable sense of community. It’s often the most significant factor in deciding whether to stay or relocate. Having good-quality tenants goes a long way in establishing those foundations. Tenant screening doesn’t just ensure your residents can afford the rent; it also reveals their tenancy history and may provide clues as to what to expect from them. A rental property is a community with its own culture. Prioritize that culture, and your people will always feel at home.
9. Be open to feedback. Seek it out-then act on it.
Tenant feedback is one of the best tools to tell you what you’re doing right and where you might be falling short. You can collect feedback in various ways, but doing it digitally is often the most effective approach, as it helps you aggregate the data into meaningful and actionable insights. Input can be gathered through online surveys (delivered via email, SMS, or via a QR code in the lobby), feedback forms, suggestion boxes, or regular tenant meetings. Just be sure to act on what you learn, or the process has little purpose.
Tenant Retention is an Ongoing Process
Your tenants, both present and future, are seeking convenience, simplicity, and alignment with their ideals of what life should be about. Use these tips to make your property a place they’ll want to call home, and you’ll always be on the money.
To learn more about how great property management can reduce turnover and associated costs, speak to the rental experts at Belwood today.
