Dec 16 2024 19 mins
The discussion focuses on best practices for dealing with tenants and prioritizing stability over turnover. Key points include:
Clarity and Respect in Communication:
Respect and clear, honest communication build trust and goodwill with tenants.
Avoid relying on texting; verbal conversations preserve nuance.
Stability Over Turnover:
Turnover is expensive due to renovation costs, contractor availability, and vacancy losses.
Prioritizing tenant retention leads to predictable, reliable income.
Aggressively raising rents risks instability and attracting less reliable tenants.
Market Strategy:
Retaining tenants by staying slightly below market rent ensures longer tenancies and avoids costly turnovers.
Rent increases should align with market dynamics and tenant agreements (e.g., transitioning to month-to-month leases at market rates).
Adding Value:
Offer tenants value through good-quality units and strong service.
Treat tenants as customers, focusing on satisfaction and fostering loyalty.
Investing in proper repairs reduces long-term issues.
Calculating Renovation ROI:
Use cap rates to determine the ROI for rent increases following renovations.
Example: A $300 monthly rent increase at a 7% cap rate adds $51,000 in property value.
Sustainability:
Avoid overpricing units or attracting desperate tenants, which can lead to instability.
Banks value stability; turnovers can complicate financing as consistent income is required.
Overall, tenant retention, stability, and adding value are central to long-term profitability and maintaining healthy rental communities.
Clarity and Respect in Communication:
Respect and clear, honest communication build trust and goodwill with tenants.
Avoid relying on texting; verbal conversations preserve nuance.
Stability Over Turnover:
Turnover is expensive due to renovation costs, contractor availability, and vacancy losses.
Prioritizing tenant retention leads to predictable, reliable income.
Aggressively raising rents risks instability and attracting less reliable tenants.
Market Strategy:
Retaining tenants by staying slightly below market rent ensures longer tenancies and avoids costly turnovers.
Rent increases should align with market dynamics and tenant agreements (e.g., transitioning to month-to-month leases at market rates).
Adding Value:
Offer tenants value through good-quality units and strong service.
Treat tenants as customers, focusing on satisfaction and fostering loyalty.
Investing in proper repairs reduces long-term issues.
Calculating Renovation ROI:
Use cap rates to determine the ROI for rent increases following renovations.
Example: A $300 monthly rent increase at a 7% cap rate adds $51,000 in property value.
Sustainability:
Avoid overpricing units or attracting desperate tenants, which can lead to instability.
Banks value stability; turnovers can complicate financing as consistent income is required.
Overall, tenant retention, stability, and adding value are central to long-term profitability and maintaining healthy rental communities.