While property is languishing rentals are booming. In ‘Charge more rent' I suggested simple strategies to fully take advantage of the increasing demand for and decline in supply of rental properties. So, how can you keep good tenants for longer while still charging them more?

Your goal is to stand out and be different from other landlords in the area. Everyone else does six months or one year leases, but you don’t have to follow the crowd. If your tenants want to leave they will, so don’t lock them in. Your goal should be to keep them from leaving without giving you notice a month in advance.

Give them something if they stay.

Some tenants don’t feel they’re losing anything if they forfeit their deposit for leaving before the stipulated date. There’s no added expense, they’re just not getting anything back. If you promise them something if they stay they are less likely to leave until they get their gift.

Free gifts, month-to-month leases, paying tenants if repairs are not made ‘in a timely manner' — these things let them know you’re not the ordinary landlord.

Offer them a gift

Anything free is good. A free gift, worth two hundred or three hundred bucks means a lot to a tenant who is living from paycheque to paycheque. My tenants that stick around all get something:

  1. Move in gift. I usually give a DVD player as this really thrills them! Most have a DVD player already, but like to have one for the bedroom too. At this point I’ll tell them about the following gift they’ll get.

  2. One year gift. The one year gift is usually a TV with a 60 centimetre screen that I give when I do my annual ‘walk through’. Is it worth R1500 to keep your tenant for one year? What is it worth to keep them for two? I think, compared to the cost of having to find a new tenant, it’s a small price to pay.

  3. Three years. Three years are worth a basic computer which I pick up for less than R3000. Again, this is a small price to pay to get someone to stay for three years.

  4. Four years. I have one tenant that I am going to send on vacation soon. For less than R2500, I can send this tenant to Cape Town for a weekend, with accommodation and dinner for two. My tenant knows he’s getting this and has already asked what he'll get for staying five years!

I spend a few Rands to keep a tenant, but it’s always less than having a vacant month.

Offer a month-to-month contract

For most landlords offering month-to-month leases is usually the suggestion that is the hardest to swallow. “They can leave whenever they want to and I can’t do anything!”

All you need to do is keep them from leaving without giving notice. If you have 30 days notice, you can have someone ready to move in as soon as the other tenant leaves. The landlord is still protected.

You keep the deposit if the tenant moves out without giving written notice a month in advance. This is plenty of time to get a new tenant ready to move into your property.

This is how I keep my vacancy rate low — as soon as my tenant says they’re moving out I start marketing the property. It currently takes about two weeks to find a tenant and they’re ready to move in when the departing tenant leaves.

My property is usually vacant just long enough to have someone do a ‘walk through’ and take care of incidentals.

Offer to pay a ‘repair penalty’

Most tenants have lived somewhere where the landlord neglected them and the property. There’s always that fear in the back of their minds — make it work for you!

Let your tenant know that you will charge them if they don’t pay their rent on time, but they can charge you if you don’t fix things in a timely manner. For example, I endeavour to take care of plumbing and appliance repairs within 24 to 48 hours while electrical repairs could take 72 hours.

I am still covered if for some reason it takes longer than usual. I notify my tenant, in writing, of the reason and the expected completion date of the repair. As long as I do this, in writing, I am not going to be penalised. However, if I don’t make the call and I don’t write the letter the tenant gets a R100 per day discount on the rent for that month. This is their insurance policy that their needs will be attended to quickly.

Make tenants feel some responsibility

My tenants are responsible for the first R300 of any repair no matter what the cause or who is at fault. If their child puts a toy car in the toilet they don’t just pay the first R300, but rather the entire bill as their child’s treatment of my property is their responsibility. My lease covers repairs and who pays for what.

  1. Plumbing. If the problem is above the floor, the tenant pays the whole bill. If the problem is below the floor (in the main drain line) the tenant pays the first R300 and the landlord pays the balance. However, in three years I have never had a problem that has been below the floor of my houses or flats.
    • Leaking sink — tenant
    • Overflowing toilet — tenant
    • Shower or bath problems — tenant
    • Clogged drains — tenant
    • Clogged drain lines — landlord

  2. Other Repairs. Some items in a house will wear out over time, but if it's the tenant who is wearing them out he or she should be responsible for the repairs.
    • Storm door squeaks — tenant
    • Doors or windows that don’t close properly — tenant
    • Appliances that break — tenant
    • Infestations — tenant
    • Geyser — landlord (after the first R300)

Always get your rent on time

One of a landlord’s biggest concerns is getting paid on time. Your contract should clearly outline what the rent is, when it’s due and what happens when rent is late.

Make rent due on the first of each month before 17:00 and be strict — 16:59 on the first is all right, but a minute later and it’s tickets! If you give a tenant until, say, the seventh they’ll take it.

  1. Due date. My rent is due by 17:00 on the 1st day of the month. The tenant is required to pay early if the first falls on a weekend or a holiday — it's late if they pay on the following Monday.

  2. Late date. Late is any time from 17:01 on the due date and if it’s late, there is a late charge — mine is R300.

  3. Eviction. Make sure you fully understand the eviction process and the laws governing it. Start taking all legal steps towards eviction the second your tenants are late with their rent.

    Immediately give your tenants a letter informing them of the eviction process that you will follow. This is usually enough motivation for a tenant to pay and if they don’t you’ve already got the ball rolling to get them out.

  4. Rent discount. My goal is not to evict and not to get a late payment fee. My goal is to get my money – on time!

    I encourage tenants to pay early by offering a discount. If I want to rent my apartment for R4000 per month I increase that to R4500 and offer a discount for paying early. If they pay ‘on time’ rather than early I get R500 more.

Many investors shy away from property, because they don’t want to be landlords. However, being a landlord is not so hard and can make you lots of money.

Just treat rental property like a business and your clients with respect!

Click here for the first article in this two part series on charging more rent and keeping tenants for longer.