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  • Writer's pictureMorgan Bonin

The Benefits of Tenant Retention Over Rent Increases

In Budapest, real estate is a dynamic market with strong competition. For landlords and real estate agencies, it can be tempting to raise rents with each lease renewal. However, it is essential to step back and consider the advantages of tenant retention instead of constantly seeking new occupants. In this article, we will explore why it may be more financially and strategically prudent to maintain long-term tenants.

Savings on Agency Fees: When a tenant vacates a property, the real estate agency often incurs additional expenses to find a replacement. These fees, usually equivalent to one month's rent, can quickly accumulate with frequent tenant turnover. By maintaining a stable relationship with your current tenants, you avoid these recurring costs, contributing to optimizing the profitability of your real estate investment.

Reducing Vacancy Periods: Vacancy periods represent a direct loss of income for property owners. By fostering a positive relationship with your tenants, you decrease the risk of extended vacancies between leases. Satisfied tenants are more likely to renew their leases, ensuring continuity in rent payments and minimizing periods of housing unoccupancy.

Savings on Improvement Expenses: Frequently changing tenants often leads to additional expenses related to renovating and improving the property. Each new tenant may have specific requirements or expectations regarding renovations and amenities. By maintaining stable relationships with your tenants, you reduce the need for frequent expenses related to major improvements, contributing to maximizing the profitability of your investment.

Long-Term Financial Stability: Tenant retention provides long-term financial stability. By avoiding frequent income fluctuations related to vacancy periods and the costs of finding new tenants, landlords can plan their finances more effectively. Financial stability also allows for considering future investments or structural improvements without constantly being subject to uncertainties related to tenant turnover.

In conclusion, the decision to retain tenants rather than increase rents in Budapest is a wise choice financially and strategically. By minimizing costs associated with finding new tenants, reducing vacancy periods, and limiting frequent improvement expenses, you maximize the profitability of your real estate investment. The long-term financial stability offered by enduring relationships with tenants can be a valuable asset in a competitive real estate market like Budapest.

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