As with any investment you are looking for great returns. (It is all about the bottom line, right!). Then run your investments like a business.
Your property is rented and you are getting decent returns. This is where you often become complacent. You start to take things for granted. The tenants have been paying their rent and you expect that to go on forever. Then the annual lease comes due and you are hoping the tenant re-signs a lease so you can keep collecting rents.
Tenant turnover cost can be a burden to you: This is where many investors forget they are investors. Consider the fact that the tenant decides to move on. You suddenly are faced with the cost of re-renting the unit. The property manager will want to get paid for the releasing fee. The unit may need to be painted and some repairs may need to be done, perhaps some carpeting replaced. The unit may be vacant for a few days, a week or more while all this unfolds.
The turnover of tenants is one of the most expensive costs a property owner faces. To avoid these expenses, you must remember you are an investor. Just as you invested in the property you too must invest in your tenants. It is imperative to let them know that you value them as a customer. Most tenants believe that as the property owner you are making big money off of them. So retaining them as a good and happy customer is paramount. This is often the most ignored aspect of property owners. Treat your investment like a business.
Invest in your tenants: Instead of waiting and hoping the tenants will renew their lease, invest in retaining them as tenants. I have had great success in retaining long term tenants by simply letting the tenants know they are important to us and that we cared about them. I would do things like send them holiday baskets or small gift certificates to the local grocery store during the holidays. This $20 (tax deductible investment will go a long way).
Offer a handyman for a day. At the time of renewal offer a handyman for a day. When sending out renewal notices I would give the incentive of a handyman for a day with a renewed lease.
As an investor the best thing you can do is invest back into your property. Consider the cost of releasing. For a fraction of that cost you can provide a handyman for the day or half day). Perhaps the tenant may want some shelves added, maybe a room painted, heck even if it meant updating a dated appliance. These are all things that will help your property retain its value. This also shows the tenant that you are working together and you genuinely care about them. These are repairs that add value to your property and retain your tenants are all done for a smaller price than the tenant turn over.
The word spreads. As you build a reputation for caring about your tenants you will be delighted to see your tenants start to refer you to other good tenants who are looking for a place to rent. Good tenant retention that refers you business is a wonderful thing and may be the best investment an investor can make.