Resident Retention

Resident Retention

Does your current management company have a resident retention plan?  Do you have a clear idea of what it is and how they plan to execute it?

Turning an apartment on average costs $4000.  You can calculate your actual cost here: http://www.multifamilyinsiders.com/apartment-turnover-cost-calculator.

A few of those a month could seriously affect your bottom line.

So how do you mitigate these costs?  The easiest way is to staunch the flow of move outs.  A knowledgeable manager has several tricks up their sleeves to accomplish this.  An effective resident retention plan should include the following:

1.       Knowledge of the submarket.  All managers should know what the rental outlook in the city where your asset is located looks like. (If they don’t it’s time for a change!) In addition to that they should be an expert at their submarket, the 5 mile radius surrounding your property.  Touring, market studies and constant communication with their direct competitors is a must.  How can they sell your asset over another if they have no idea what their competitor is offering?

2.       Knowledge of your asset.  This should be a given, but I think if you were to interview your current manager you might be surprised at how little they know about your asset.  Do they know what year was built, what the current demographic is or what your number one lead generation tool is?

3.       Customer Service. This too should be a given but have you had a chance to read your resident’s comments on www.apartmentratings.com? I think you might be surprised by what your tenants say about the current staff and the way their concerns are handled.  No one will resign a lease if they feel that they have been mistreated, their service requests not handled or they get attitude when they come into the office.

4.       Lease expiration matrix. This is not a new idea but it is one that isn’t widely utilized.  Making sure that your lease expirations are spaced throughout the year can lower your vacancy loss significantly.  For instance if you have a 40 unit property, you do not want 8 leases to expire in December (traditionally the slowest leasing month).  Those apartments will likely sit vacant for several weeks, maybe even a few months killing your NOI.  A good manager will make sure that the majority of your lease expirations are occurring in the warmer months therefore making them easier to rent and lowering your vacancy loss.

5.       Vendor Relationships. If your manager does not know your turn vendors on a first name basis, they are probably not getting you the best deal.  Most vendors will offer discounts to the companies that utilize them the most.  They will also make sure that they are mitigating costs and giving you the best service because of the established business relationship.  Your manager should be your number one cheerleader and should be running your asset as if it were his/her own.

Not all tenants will renew.  Some must move for financial, family obligations,  a job or they have purchased a home.  We cannot save every lease.  Make sure you know why your tenants are moving though.  Find out what is your number one contributing factor to turnover.  Then do everything you can to stem the tide.

Athena Magruder

Vice President Operations

Mission Real Estate & Property Management, Inc.
3600 Pegasus Dr #15 Bakersfield, CA 93308
www.missionre.com