How To Keep A Good Tenant Without Going Broke

One of the greatest fears many Minneapolis duplex owners have is losing a good tenant.

A good tenant is usually defined as someone who pays rent on time, keeps their unit relatively clean, and is realistic insofar as what the landlord should repair in a timely manner.

Let’s face it; good tenants make like easier for duplex owners, and great tenants — the ones who truly treat the property as if it were their own, are a dream come true.

Generally speaking, the landlords I run into will do almost anything to keep a good or great tenant from leaving. Most often, this strategy entails keeping rents 20 percent or more below current market rates. After all, the theory goes, why would anyone leave if it’s going to be more expensive elsewhere?

I understand that logic. And yet, my question is; if rent was just 5 or 10 percent below market rates, wouldn’t it have the same result?

Tenants study Craigslist. They know when they’re getting a great deal. Odds are they aren’t going to spend money renting a truck and plying their friends with beer in order to get help moving if they’re still getting a good,  but not great deal.

And if they’re a long term tenant, odds are the property’s expenses have risen during their residency. Higher costs, without a corresponding increase in revenue result in reduced cash flow.

As a duplex investor, cash flow is important not only for the highest rate of return on the dollar, but also for the value it adds to the property when it comes time to sell.

After all, the financial rewards of real estate investment are why most of us got into owning duplexes in the first place.