A major key to landlord profits is to avoid vacancy, turnover, and maintenance. The best way to do this is to motivate tenants to renew year after year. I do this with my non-rent raise letter that is sent out at the time of lease renwal. Here’s how it works.
Every year in December, along with my rental renewal letter, I send out a form letter that explains that, maintenance, taxes and insurance have gone up, so rents must go up to match them, then I fill in a blank space to show the recipient how much his rent is going to increase with the next month’s rent.
On the same page, I write in my own handwriting that, because this particular tenant has taken such good care of his landscaping, or kept the house so presentable, or gone to so much trouble to keep the house neat and clean inside, that his rent is not going to go up at all so long as he keeps up the good work.
People are funny, when they think that they are getting something that others aren’t getting, it makes them happy; so happy that they renew their lease almost automatically. This works particularly well in a soft rental market where tenants have lots of choices of where to live. The joker in the deck is that all my tenants get this same relief from a rent raise, and almost all of them renew their Rental Contract for another year.
In a tight rental market where rents can be raised easily, I might not give them total immunity from raised rents, but I might cut in in half. For example, if I were going to raise rents 10% on a $1000 per month rental, that would be $100 per month. My handwritten note attached to the rental contract might reduce this to $50 if they’d paint something, or plant something, or put in a fence, etc. This still motivates them to renew and I still keep a happy tenant and avoid having to deal with vacancy, turnover, or extra maintenance.
