4 ways strong tenant relationships support your investment property income
The point of buying investment property is to turn it into a source of income, and there are plenty of ways to do this. In addition to actual investment techniques and financial strategies, your profits are affected by the relationships you build with your tenants.
Great tenant relationships generally contribute to a well-maintained property. They also help you avoid the costly, lengthy process of eviction. Tenants that respect their landlords are more likely to report issues, allow repairs, and communicate; all of which are necessary for keeping your costs low and profits high.
Here are several ways strong tenant relationships support your investment income:
Strong tenant relationships reduce vacancies
The last thing you want is an empty unit. Each vacancy you have reduces your revenue potential by over 8%. When you’ve got a close relationship with your tenants, they’ll be more likely to give proper notice, which allows you time to find another tenant.
It’s challenging to maintain relationships with tenants you rarely interact with, but it must be done. If not by you, then by a property management company handling your rentals for you. Houston home rental agencies like Green Residential make this process easier for property owners who live busy lives. Property management companies have a unique advantage over the average property owner; they’re always building tenant relationships. It’s part of the job.
Less potential for hidden damage
Tenants often hide damage and needed repairs from landlords. Sometimes people don’t want their landlord to see their messy home. Some people don’t want to be inconvenienced, while others are afraid of getting kicked out for visible damage and lease violations (like pets).
Every property needs repairs periodically, but you can only make those repairs if your tenant tells you about them. Sometimes tenants find workarounds for small issues like broken screen doors, drafty windows, and bad burners on the stove. Other repairs are more serious and can cause significant damage if left undone. For example, a leak in the ceiling can ruin the walls, insulation, electrical wiring, and the carpet. If a tenant doesn’t tell you about a leak when it first starts, it will become an expensive nightmare by the time they do.
A healthy relationship with a tenant will make them more likely to notify you when there’s a leak in the ceiling, or when something else serious needs to be addressed.
Good rapport reduces the risk of eviction
Having to evict a tenant is never a good situation to be in. Impending eviction puts desperate tenants on edge, and might encourage some to intentionally damage your home. Maintaining good rapport with your tenants gives you a better chance at resolving problems through communication rather than a court order for eviction.
If you do have to resort to eviction, you could end up with a mess like this landlord found after his tenants finally moved out.
A tenant that wants to upsize might stick with you
When a tenant you’re in rapport with needs a bigger home, they’ll be more likely to look at units you own first. Condos and apartments are easy to find, but tenants never know what they’re walking into in terms of the landlord. Some landlords don’t show their true colors until after a tenant moves in.
When a tenant likes you, they won’t want a new landlord. If you have multiple properties, they’ll ask you what’s available within their budget. If they’re an excellent tenant, it’s worth extending a discount if the rent is too much for them. For example, if you’ve got a three bedroom home available for $400/month more than their apartment, knock the rent down a couple hundred dollars and avoid the gamble. Excellent tenants are hard to find.
Good tenant relationships are built on respect
All strong relationships are built on trust. Trust is formed when people meet their commitments, stick to their word, and don’t take others for granted. Respect is a by-product of trust.
When a tenant respects you, they’ll take care of your house. When your property is taken care of, you won’t have to spend thousands of dollars making repairs between tenants. Tenants who respect you are more likely to own up to damages they’ve caused and you won’t need to take them to court. That means your investment income stays in your pocket where it belongs.