- Jun 03, 2013
Sometimes the most obvious challenges are the easiest to overlook. Multifamily managers and owners have always faced the challenge of dealing with resident turnover, but how the process is managed can make all the difference.
The average stabilized apartment community faces a turnover rate of 35 to 40 percent, while college adjacent communities can experience up to 60 or 70 percent turnover. Management of this turnover is a large part of a property management company’s responsibilities and is the key to the longevity of any community.
The overall objective in managing resident turnover is to minimize profit loss. As a leading property management company for over 40 years, Western National Property Management has always focused on maximizing clients’ profits by managing turnover as effectively and efficiently as possible. To do this, we start with the basics, including the understanding of each community’s market, renter demographics, strengths and weaknesses.
From there, we employ a number of ongoing strategies that can protect properties as we manage the flow of residents moving in and out. Three major strategies that can assist property managers in managing resident turnover include:
1. First focus on customer service
On average, residents decide within the first 30 days of their lease whether they will renew at the end of their initial term. That said, the level of customer service and care provided at the beginning of a lease term is a key factor in a community’s overall resident retention. To increase a community’s success and overall profitability, it is essential for any property management company to make customer service skills a priority.
Moving is always a hassle for renters, and many are likely feeling stress during the rental process. As such, the leasing staff must focus on making the new resident’s move as seamless as possible by being available to answer any questions about the new apartment home or the surrounding neighborhood. Residents will be most aware of their community manager’s customer service skills during this time, giving the property management team the opportunity to make a good first impression. This first impression will follow a community management team throughout the lease term and will have a large effect on the renter’s perception of the community. Ultimately, this initial impression will be a major factor in many residents’ decision regarding whether or not to renew a lease.
At Western National Property Management, we recommend going the extra mile with consistent resident follow up. Not only should the leasing team do everything in their power to assist new residents when they are signing papers in the management office, but someone also needs to follow up after the resident has left the office. The property management team should be ready and willing to help throughout a resident’s entire move-in process.
For example, at our communities we have our community manager—rather than our leasing staff—follow up personally with each new resident during their move-in. This connection establishes an open line of communication and begins to build a feeling of community for the resident. Residents commonly appreciate the extra effort and will likely be left with a better impression of the staff if they know that their property manager truly cares about their move-in.
Once a move-in is complete, the focus on customer service has only just begun. Customer service must be a consistent focus throughout a resident’s lease term. Residents who have a connection with the onsite staff and feel a sense of community in their apartment environment are much more likely to renew their leases. Community managers can assist with this connection by planning community events and encouraging neighbor interaction, which helps residents feel more engaged with the community.
At Western National Property Management, we remain committed to creating this sense of community at each of our properties. In order to implement this, we recently partnered with CARE, an organization that creates onsite programs and events for our residents. The CARE team lives onsite at each property and serves as an arm of our management team. These professionals also meet with every new resident and work to engage them within the apartment community and its residents.
The result of our partnership with CARE has been overwhelmingly positive. The new programs and events have brought many of our residents together, helping them to feel more connected and turning neighbors into friends. Ultimately, this community interaction and connection has helped to boost overall retention. Residents enjoy the community environment and do not want to move at the end of their lease terms.
Overall, investing in partners such as CARE or working diligently with onsite staff to create programs and events for the tenants is a worthwhile investment that can have a positive impact on a property’s bottom line.
2. Use software to manage turnover
Property management software systems can be amazing tools for community managers. There are many options today that provide the information needed to best sign and renew leases, while also managing move-outs.
Revenue Management Software systems are especially helpful tools. These programs can give community managers the ability to review a community’s history and forecast when turnover is likely to occur within the yearly cycle. Community managers can also use this software to stagger move-out dates and keep track of lease expirations to ensure they are allocated appropriately based on traffic trends. As a result, operations are more manageable for onsite staff, and a community’s bottom line is also protected from a sudden dip in rental income.
Revenue management software can also help to determine the rental rate for each unit. These software systems provide daily updates that reflect a community’s history and the latest market trends in order to ensure that the property’s owner is receiving the maximum rental rate for each unit on any given day.
For example, if a property’s best rental month in 2012 happened to occur in June, the software would automatically adjust new rental rates for June 2013, and it would raise them accordingly.
Software programs can be very advantageous in the property management business, and through these systems, we are constantly transforming the way we conduct our business. At Western National Property Management, we have been testing software that would make the move-out process much more seamless for both the property staff and tenants. This particular software gives residents the ability to manage their move-out online, allowing them to place their 30-day notice, schedule a walkthrough, review final inspections, and more.
Although this software can expedite and simplify the move-out process, it is important to remember that this technology also allows for minimal direct communication between the community manager and resident. Community managers must be diligent in maintaining a personal connection with each resident in order to ensure that any appointments made through the software system are kept. By monitoring the software on an ongoing basis, managers can also ensure that no move-outs are delayed due to lack of communication.
Increased use of software can be a fantastic asset to any community, but community managers must not forget to ensure that residents still have personal interaction with team members and the community. This interaction will keep residents engaged and maintain a sense of community that will ultimately protect the property’s bottom line from high turnover rates.
3. Make the most out of a move-out
Even if the staff has done all they can to make a resident feel at home in their apartment community, there are always forces beyond the manager’s control that can cause residents to move. In these cases, a property management company’s move-out process and procedure is of the utmost importance. Being prepared is key for every company, and this preparation can often help to avoid hundreds or thousands of dollars in loss when an apartment turns over.
The standard renewal notice for renters has emerged as 30 or 60 days, and this time period has become even more important as the economy has struggled over the past few years. This notice period gives the renter time to decide if they would like to move, and, in the case of a move-out, allows plenty of time to notify the community in order for the management team to adequately prepare.
When a 30-day notice is received from a resident, the apartment turnover process must begin immediately. Managers must quickly schedule an initial walkthrough with the current resident in order to review the state of the apartment. Following the walk-through, the management team can prepare an estimate of the budget and timeline that will be required in order to restore the property to peak rental condition. A walk-through also gives the maintenance teams the opportunity to order necessary materials, such as carpet and paint, which allows them to begin repairs on a unit the moment it becomes vacant.
An efficient final inspection is also important in managing a successful turnover. The final inspection provides the management team with a complete list of necessary repairs for the unit, while also providing the now former resident with information about the return of his or her deposit. During the final walkthrough with a resident, community managers should thoroughly review the items that will need repair and estimate costs, all while explaining how this will affect the amount of the deposit that is returned. By communicating this information up front, a property management team can help to ensure a smooth transition and assist residents in understanding what is expected of them.
Deposit returns can be beneficial in helping to recoup lost revenue on a unit. If a tenant is behind on rent or utility bills, this amount can be subtracted from the deposit, which can combat potential losses. In addition, if an apartment is left damaged, community managers can utilize the deposit to offset the cost of repairing appliances, walls, carpet, fixtures, etc.
In order to ensure these funds are available, a good property management firm must think ahead to ensure that an adequate deposit is collected during the initial lease signing. By requiring a substantial deposit, managers can often save a property from incurring major costs down the road.
Although resident turnover can be a great deal of work for the onsite team and inevitably incurs some cost, the process does have some positive aspects. First, it gives the maintenance team a chance to inspect the entire apartment and make necessary repairs, providing an opportunity for preventative maintenance on a unit. This is especially helpful when inspecting appliances and heating/cooling systems. In addition, when a resident moves out, the rental rate on that particular unit can be raised for the next tenant, ultimately adding to the profitability of a property.
The bottom line: be prepared
Being prepared is a community manager’s best defense against the potential loss associated with resident turnover. Having a process in place for each part of the move-in and move-out is integral to the success of any community and will contribute to the overall success of any property management company.
Focusing on customer service, utilizing property management software and making the most of move-outs are three useful strategies that can make the management of resident turnover more effective and efficient. These elements will often make the difference between a property with a high turnover rate and one that benefits from long-term residents and a manageable amount of turnovers.
Julie Manthey is vice president of operations at Western National Property Management.