Long term tenancies without a shadow of doubt are great when you are building your portfolio.
First off, you have less headache of changing tenants, tenancies and associated costs.
With in the first few years of your investment journey, you can sure do with less management headaches.
That rarely is the case.
That probably is an ideal scenario before we take some hit and start improving our processes and specifically, arrest the loss of cashflow.
The reality is:
You probably will end up with tenants and letting agents who do not align with your values and investment plans, leading to frustration and not being able to make money from buy-to-let investments.
This post is specifically written to highlight those areas that we need to work as investors to build that long term trust with tenants and make some money.
1) Define Your Tenant Profile
Your journey of working with tenants starts from day 1.
It starts from the day you choose your investment strategy to visualise what type of tenants you are creating your investments for.
Unless you have that tenant profile, you don’t have a property profile or the portfolio profile.
Take some time and define your tenant profile to ensure you have a good understanding of your target market so you can provide your services to a niche market you serve to.
2) Maintenance Repairs Rules
Have a system for addressing the tenant issues reported.
The speed at which you address the reported issues by tenants secures you the long term tenancies and the trust of both tenants and letting agents.
As a small system at Limitless Monks, we follow below service protocol for property maintenance.
We classify the issues reported based on their severity which solely is governed by impact to tenants and to the property.
- Severity 1 (S1) issues to be addressed in under 24 hours. In the event of unavailability of power team, communicate to letting agent every 6 hours on what is being done and try to close the issue in under 48 hours.
- Severity 2 (S2) issues to be addressed in under 76 hours with communications going out at least once a day.
- Severity 3 (S3) issues i.e. cosmetic issues to be addressed in under a week and communications going out when the team member is engaged and issue is closed.
We witness that tenants prefer to stay longer when we explain them the process via letting agents and try our best to stick to the process.
3) How Your Build Team Communicates Matters
How your build team communicates with tenants when issues are reported matters.
If need be, you may have to inform/train your build team on what and how to communicate to ensure you have engaged tenants.
We have been fortunate to have a build team who are more friendlier than us and gel very well with our tenants.
Here is the thing:
When you work on these communications, you observe a tendency where letting agent directly calls the build team on your behalf and the build team member directly calls tenants (with permission) to book an appointment to fix the issue.
Useful if you are an investor who is staying far away from where the property is located.
4) New Kitchen And Bathroom Any Day
The quality of kitchen and bathroom pretty much defines the lettings of a standard buy to let.
If that is the case, why not just have new kitchen and bath as minimum within your buy to lets assuming you are buying properties needing refurbishment?
This is not to say you should mandate new kitchen and bathroom but where there is a case of refurb, then stick to new kitchen and bathrooms as much as possible.
5) The Survey And Survival Factor
Not many will do this but this works well if you start to measure your portfolio with some feedback and with some high level analytics.
- Average Tenant Retention: It’s a useful metric for you to know as a landlord if tenants are staying longer periods or if there are some issues that needs sorting out. Our average tenant retention within our buy to lets has been a little over 2 years across the portfolio. This actually improved from 1.5 years to 2 years in last two years.
- Tenant Satisfaction Survey: Have you ever asked just about 3 questions to your tenants on what they think about how they feel about living in the property?
- Rate your experience tenanting the property on a scale of 1 to 10.
- Would you like to go for a 1 year agreement if you freeze the rent as it is now?
- If there is one thing you think can be improved to improve quality of your tenancy, what would that be?
Those are just sample questions but you are free to define your own that suits you.
A question like “what can be improved” above will also give scope to increase the rent on the property assuming you have provided additional features that tenant requested.
6) Choose Your Agents Wisely
Get this wrong i.e. incorrect letting agents, there is limited chance for you to earn any cashflow on the portfolio.
In our experience and also how we are setup, letting agents have played a big part to work with tenants and tenant selection.
There was a period of 7 months in our lives where we were stuck with an agent who did not have systems and we pretty much spent half of our time chasing up everything including the rents.
Draw a line and take a call to move the portfolio of houses to one who suits your values and your operational style. We did that and we started breathing life again.
You may want to read this post on what we did to ascertain we have chosen our letting agent properly after some not so good experiences.
7) Have Tenant Reviews In Place Before You Offer Extras
Its very common for tenants to come and ask for more.
Simple things like want to have a pet, love to have new wall paper and can I change the carpets?
All three things were live examples from our tenants while we have a policy of no pets, no smoking in the house and no changes to the house.
We have changed our contract specifically for those tenants, given their long term association and ability to keep the house in order.
Consider the factors that you think you want to have in place before you say a “Yes” to a request.
Our criteria is simple and is based on responses to below questions.
- Has the tenant stayed at least a year and is he/she prepared to write a contract for another year?
- Has the tenant kept the property secure and clean within the tenancy period.
- Has the tenant reported the issues in time and allowed us to fix the issues.
- Is tenant OK to sign revised agreement with updated conditions should we allow extra requests.
8) Wish Your Tenant
It is timely that we are writing this.
Every Christmas, we have a habit of visiting our long term tenants to wish them well and handover a token of our respect to them for taking care of our property for the whole year.
It’s that festive time now and we are all excited to see them soon.
A credit to those who taught us this tip, it worked very well for us to get closer to our tenants and some of the neighbours of our buy to lets.
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