Saving money by retaining tenants

Posted On Thursday, 13 June 2002 10:01 Published by eProp Commercial Property News
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Tenant retention is a key factor in achieving maximum returns on a landlord's investment

JHI Real Estate

 

Lease renewals are a vital service carried out by property management companies. Rental renewals are negotiated well before the renewal date to protect the owners from a possible loss of tenants who may be enticed into relocating.

Kim Fraser, senior portfolio manager at JHI Real Estate's Bellville office in the Western Cape, says this in turn would not only create a loss of income due to a possible vacancy but amounts to an expense to the property owner.

Costs such as a 100% commission on new leases negotiated on behalf of the landlord and the possible upfront cost of tenant installations contribute to these expenses.

'The possible loss of income and additional expenses could amount to anything between 8% to 10% of the total lease value on a three- to fiveyear lease, taking into account an initial two- to three-month vacancy,' says Fraser. 'By comparison, on a renewal lease the commission of 50% of tariff payable by the landlord results in a 1% to 2% cost.'

 

Last modified on Wednesday, 21 May 2014 19:10

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