Enhancing property values and tenant retention are investments that can yield significant returns.
When you own real estate and manage tenants, you have two choices. You can treat your property solely as a business transaction, collecting rent and resigning yourself to tenants who cycle in and out, or you can create a rental property that feels like home. In the first scenario, you’re likely to feel resentful when tenants leave, but in the second? Your tenants may stay for years, and your investment yields big returns. The way to increase tenant retention while adding value to your property is simple: Invest in community amenities.
Why Invest in Community Amenities?
Investing in community amenities has become a pivotal strategy in the real estate industry. The global pandemic shifted the way many people thought about their homes. Once work became remote, many tenants realized their houses were only suitable for sleeping and essential meal preparation. Their space felt more like a kitchenette motel than a home.
Community amenities extend beyond the physical aspects of a property. They build a community where people feel safe and comfortable, a place they look forward to coming home to and want to take care of. Once tenants feel welcome and part of the community in their building, they tend to stay longer, treating their homes as if they were owners, not renters.
This shift in attitude has another benefit: an increase in property value. Adding amenities helps justify the price per square foot—especially if you need to increase it.
Community amenities can vary depending on the property’s location and what’s popular in that area. For example, an outdoor swimming pool in a rental property in North Dakota is not likely to get much airtime. But a carefully manicured indoor green space might be more attractive.
Some examples of community amenities include:
- Fitness centers
- Dog parks or walking spaces
- Package receiving
- Media rooms
- Coworking space
- Community gardens
- Outdoor space
- Shared meeting spaces
Benefits of Community Amenities
If getting the most out of your investment is top of mind, it’s simple to see how community amenities can enhance your property’s value.
Community Amenities Attract High-Value Tenants. High-value tenants aren’t shy about insisting upon community amenities. They often look not only at the unit they are renting but also at everything around it. They are looking for well-maintained fitness centers, swimming pools, or communal lounges. These features are critical for people looking for comfort and convenience, especially younger renters who value a move-in ready space with walkable and on-site amenities.
The demand for these features can drive up property values, especially in areas that have few properties with these amenities already in place. It also increases the rent you can charge—even above the current market rates in your area.
Community Amenities Make Your Property More Competitive. Just under 40% of Americans are renters, and there is currently a shortage of rental properties that are both available and affordable. Although buildings with community amenities are not often considered affordable housing, it is possible to put amenities in place that enhance property values and make them more competitive, especially in areas where housing options are more abundant.
When buyers or renters have options, a property with attractive community amenities is more likely to win. Even if the price increase is modest, low vacancy rates can pay big over time.
Community Amenities Add to Your Long-Term Value Appreciation. Adding amenities comes with initial costs, but if properly maintained and upgraded, they can lead to property appreciation. A beautifully landscaped garden or a well-designed rooftop terrace only improves over time. The initial outlay in fast Wi-Fi and comfortable workspaces reaps dividends in attracting young professionals. The enduring appeal of these amenities contributes to long-term value appreciation.
And if you’re looking to liquidate quickly, a cash offer on a property with extra amenities is usually higher than one without. Cash offers close faster but often come in lower than a financed sale. If you want to get out, community amenities can help you get more money.
How Community Amenities Improve Tenant Retention
Ultimately, tenants are paying the bills as your property increases in value. But empty units aren’t worth much. Adding amenities keeps tenants happy—and happy tenants stick around. Why?
Tenant Satisfaction and Quality of Life Improve. Satisfied tenants with a good quality of life are less likely to move. And with the average tenant turnover costing landlords $1,000 to $5,000, it’s easy to see how adding amenities is worth the initial investment in tenant satisfaction. Tenants understand the value of a well-equipped gym or pet-friendly environment, and they appreciate the peace and ease these amenities provide. This is a good deal for both tenant and landlord that leads to more lease renewals.
Tenants Feel a Sense of Community. Having a home is much more than having a house. A house is just a structure, but a home is where you come for comfort, safety, and community. Whether investing in your first rental property or closing on your 50th, fostering a sense of community among residents is crucial. Tenants who feel a sense of belonging are less likely to leave. Investing in shared community spaces like common rooms, courtyards, or communal kitchens encourages social interaction and neighborly bonds.
Tenant Loyalty Increases. To put it bluntly, most renters know their landlord is an investor who wants to make money on a property. However, the investors who make the most money recognize the people in the property are what makes the investment possible in the first place.
Tenants who feel their landlord genuinely cares for them will be loyal to that person. Positive experiences in a building with amenities designed to make life easier contribute to lower vacancy rates (and vacancies filled by word-of-mouth referrals). Add responsive property management, and you’re looking at a property filled with long-term, happy tenants.
Community Amenities Make the Investment
Community amenities are more than just an added expense. They are a strategic move that can yield substantial returns by enhancing property values and improving tenant retention. Although the initial cost can be daunting, investing in amenities yields significant returns over the life of your investment.
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