If you want to maximize profits, focus on figuring out how to keep a tenant 20 years!
As a way of review, the first four were:
1. Buy the right house
2. Get that house in great shape
3. Put time and effort into curb appeal
4. Create a strong maintenance response system
These four are great foundational points and I would say a good landlord already practices these things and recognizes their importance.
Now we’re going to move into some less obvious points that are critical to keeping your tenant for years and years. So here we go…with number FIVE:
5. Recognize the Tenant is the Customer
This may sound like common sense but we’ve found that not every owner recognizes that their tenant is the customer. Instead, some owners view tenants as an ATM and are more interested in calculating ROI than understanding how to achieve that ROI.
This is highlighted when something in the house needs to be fixed but the owner is resistant because they wouldn’t have a problem living in their own house with that issue.
At Crown, Robert just terminated an owner because a tenant was worried about a deck that was swaying. When Crown took it to the owner, their response was, “It’s been that way for 20 years. I’m not going to fix it now.”
That response and attitude got the owner fired.
Why? Because of the liability involved when a tenant reports a possible hazard and there’s nothing done in response.
You Are In Customer Service
Crown preaches to their owners and investors that they need to understand the difference in what you would live with and what a tenant is expected to live with inside of a rental house. You, as an investor, are now in the customer service business and that means providing a great product and service to back it up.
It’s important that certain items in the house should be taken care of so that you as an investor can maximize profit and keep the tenant long term.
Robert says that if a tenant sees a double cylinder deadbolt when they rent the house, the assumption is that the deadbolt works. But when it doesn’t and the tenant complains, an investor might say, “I haven’t a had a key to that deadbolt for 10 years. Just let the tenant deal with the doorknob lock and that’s good enough.”
That’s not good enough.
The tenant will expect that deadbolt to work and so it needs to be replaced.
Robert believes that owners need to understand that a whole new set of laws come into play that didn’t come into play when the owner lived there.
They now have a commercial enterprise. This is now a business and new laws engage and govern the way you treat, deal and interact with that tenant that you were not subject to when you lived in the house.
So, as an investor, it’s important to change your mindset. It is a commercial enterprise now and, if somebody else lives in the house, it doesn’t mean they have to tolerate what you tolerated.
It’s a mindset shift that must take place if you want to keep a tenant for 20 years.
6. Provide Scheduled Maintenance Opportunities
As Robert’s group at Crown regularly keeps tenants 5, 10, 15 years, they like to ask the question, “Why do you continue to stay in the house?” The biggest reason they hear is, “Good maintenance response system.”
The second most common answer is, “The owner obviously cares for the house because we have scheduled maintenance being done on a regular basis”.
These are opportunities for you, the owner, to make an impression on the tenant.
Some of the things that Crown offers its owners:
- Landscaping twice a year
- Weed prevention and treatment
- Shrubbery trimming
- Gutter cleaning
- HVAC checkup
- Termite Bond
On Robert’s personal rental properties he has landscaping done four times a year because it shows the tenant he cares about where they’re living.
These are called scheduled maintenance opportunities and Crown believes that being proactive is the best method. You don’t want to wait for the tenant to complain.
Scheduling is important because if you wait and manage ‘fix on failure’ it’s usually going to happen at an inopportune time. Every year Crown has a termite contractor go and walk their properties and issue an annual bond for the coming year. And termite bonds are are a preventative measure, because once you find termites, it’s too late.
Just like us, tenants want to be proud of where they live and if you can provide this for them, you’ll have a satisfied tenant and one that wants to stay in your house for many years.
7. Practice Great Communication Skills
What do owners and tenants really want from their owner (or property manager)? Good communication. From experience, this is where Robert has seen a lot of private landlords make a mistake.
“They get the tenant in, hugs and kisses, they make sure the rent comes in and then they go on a communication vacation.
Most investors who get into this business have jobs that are pretty demanding. On top of that, they have a family, kids sporting events, dental appointments, vacations and eventually they slow down on their response to the tenant. And the tenant is expecting a fast, quick, and easy response system. In this business, a strong communication system with the tenant and owner is imperative.”
At Crown, they use Fonality.com, a web-based phone system where you can control where those incoming phone calls go. For years, Crown has rotated the emergency phone around the office.
At gkhouses.com we have a 24-hour service line that can take care of service calls and handle the middle of the night emergencies.
Robert suggests that if you have a problem with tenants calling and saying things are emergency but in fact, they aren’t, just issue a $100 fine for anything that is not truly an emergency.
At Crown, it cut down the number of ‘emergency’ calls dramatically!
Common sense can usually be followed here. If it’s backed up sewage on Sunday afternoon, it needs to be dealt with. If it’s a crack in a window on a Saturday night, it’s not an emergency.
At Crown they’ve been implementing a new instant messaging system so the managers can respond at different times of the day and weekend and evenings.
Robert and his Crown team have put together a tenant handbook for the most commonly asked questions…and he suggests that every good investor ought to distribute to them to new tenants.
For the property manager, he suggests pulling your staff together and asking the question, “What are the 10 most common questions a tenant asks?” Compile those answers and put the answers in a tenant handbook.
If you’re a landlord who has several properties, this is a great idea for you as well.
At this point, Robert says that approximately 40% of tenant calls are maintenance related and the other 60% are commonly asked questions.
Find a communication system that works for you and make your tenants feel like you care.
You’ll end up with tenants that don’t want to leave.
8. Tenant Appreciation
And finally, one of the most important aspects that will help you keep a tenant 20 years is that you need to treat tenants like you would your staff if you owned a business…and this means it’s important to make them feel appreciated. Robert insists that investors would do more good and get a greater return by appreciating their tenants more. It’s not a requirement and it’s not in the lease, but they routinely send gift cards to tenants for different reasons.
Some examples of how Crown has used this gift card strategy:
- When they endure a maintenance problem
- They renew their lease
- When they pass a home inspection
- If you find out about any difficulty – divorce, death in the family, etc.
Robert says that anytime you send a $20 gift card and say, “I’m really sorry to hear about your struggle…let us know if there’s anything we can do“, it’s going to mean a lot and show them you care.
He had a lot of great ideas:
“What if you noticed that they paid rent on time for six months? Or even if they’ve gotten behind, worked out a payment plan and finally gotten caught up…it will change their attitude towards your company.
Some landlords are going to be too cheap to consider this strategy. They’ll say, “Why should I send them a gift card for paying six months on time…isn’t that what they agreed to do? Why should I applaud a tenant for that?”
And you can definitely take that approach. But in the long run, if you never appreciate your tenants, you more than likely won’t keep them long term. The goal is for them to believe you care.”
The Crown Carnival
This year Robert and the team at Crown took this practice to another level. They planned what he calls The Crown Carnival.
Unfortunately, the day was canceled due to severe storms in the area but he ended up hosting ‘Giveaways‘ that included tablets, gas cards and even a cruise for two.
For an investor, this doesn’t make a lot of sense. But the important message is to think about ways to celebrate your tenants. Keeping a good tenant in your house for 20 years will most likely result in significant ROI.
At gkhouses.com we are reconsidering everything we do in order to make sure we reward the best tenants.
As demand for rental property continues to increase, especially among millennials, make sure you’re providing an excellent product and even better service.
You’ll stand out above the rest when you can do these 8 things well:
- Buy the right house
- 2. Get that house in great shape
- Put time and effort into curb appeal
- Create a strong maintenance response system
- Recognize that the tenant is the customer
- Provide scheduled maintenance opportunities
- Practice great communication skills
- Appreciate the tenant
So the question you should consider is, “Do I want to keep my best tenants 20 years or not?”
If you answer “YES!” to this question, then follow these 8 principles and you’re well on your way.
If you don’t use gkhouses.com as your property manager, what have you done to keep your best tenants?
We’d love to hear from you.