05 Apr Resident Retention and How It Saves You Money!
Studies have shown that the average tenure for a resident at a rental home is nine months or less and this could be costly for your investment. Some specialists have estimated that it costs five times as much to re-rent a home as it does to keep an existing resident. Add the average cost to turn a unit, advertise the vacancy and a months lost rent. Multiply that result by the national average for resident turnover of 60%. This will give you an estimate of what vacancies could be costing you annually.
Let’s take an average 3 bedroom apartment renting at $695. Add the average turn cost of $300-$500 as well as advertising. Multiply the result by 60% and you have a potential $2000 annually in lost revenue from turnover. It’s a lot cheaper to keep residents happy.
Residents can be demanding with high, but generally reasonable expectations. They expect their grounds to be neat; their appliances, lighting and plumbing to work; their parking problems resolved; and a sense of being home. When there is a problem, they want management to be empathetic and everything resolved quickly with the minimum amount of inconvenience to them.
Service and convenience are the major reasons that customers choose rental housing. We continually strive to give our residents great customer service whether it be through fun contests or simply acknowledging requests in a timely manner.
- Maintenance Requests – These should always be handled quickly and must be done right the first time. This not only saves you money, but not handling requests quickly is the leading cause of resident dissatisfaction. By making repairs quickly and correctly this alone can keep your resident from looking for a new rental.
- Provide Excellent Service – By creating a warm relationship with residents, asking questions and getting to know them, this lets residents know we’re happy to have them as residents. They should be treated fairly and consistently while letting them know that they are not just another rent roll.
- Renewal Rewards – Offering residents incentives to stay like gift certificates, a free carpet cleaning, or a one month rent concession if they sign a 12 month lease is a great negotiating tool that can be used rather than lowering rent for a year. This also gives them more of a reason to sign a 12 month lease rather than a 6-9 month lease.
- Training – A resident retention program cannot be effective if the team is not properly trained to implement it. We continually train our managers, maintenance technicians, and our office staff to go above and beyond for our residents and investors alike. We take constructive criticism and implement ways to improve constantly. Education should be taken seriously and Property Managers should be well informed of new fairhousing laws and practices as well as customer service.
The primary goal of property management should be to keep existing residents happy in order to maximize our owner’s investment. Let’s go back to the cost of turnover, $2000 is a large price to pay annually when the cost of retaining a resident is free! There will always be some reasons residents leave that can’t be controlled (buying a home, job transfers, etc.), but by creating a community and relationship we can help minimize the number of residents that leave. We want our residents to consider Capital Group a great place to call home as well as a solid investment that produces for our owners!