Do We Really Want Our Residents to Stay?
With turnover rates hovering in the 50 percent range, keeping people longer improves operating performance and adds cash to the bottom line.
Resident retention is always a popular topic in property management. And it should be! With turnover rates hovering in the 50 percent range, keeping people longer is probably the easiest way to improve operating performance and bring more cash to the bottom line.
And yet, it seems that for all its importance, and all the discussion, the amount of time and money actively spent on retention is a pittance compared to the amounts spent on leasing. I believe that the least expensive turnover is the one that does not even occur. So, why not take a page from the operating books of other industries and incent our residents to stay?
Most of us know that, when all costs are factored in, a turnover can easily cost anywhere from $2,000 to $5,000 (including maintenance, lost rent, marketing, etc.). Yet, how many communities do you know that are willing to spend even $400 or more to help keep that resident longer? You could buy them a new TV and give them a nice dinner out – and you’d still be ahead even if they stayed just a few months longer.
If a 100-unit property goes from turning 50 units annually (50 percent turnover) to 40 units annually, that property can easily save $35,000, assuming just a $3,500 turnover cost (they’d actually save more, because staff time wouldn’t be taken up with repairing and re-leasing all those units). How many of your residents would stay another year if you were willing to offer them that $3,500?