Resident Retention = Increased NOI & Asset Value
Submitted by M. Ward
It’s no secret that the costs associated with resident turnover can be exorbitant. Recent studies estimates move-out costs hover around $4,000, which includes loss of rental income, advertising, concessions and turnover costs preparing the unit for occupancy. So, how can we as property managers encourage lease renewals and ultimately increase value through NOI?
It’s quite simple……exceptional customer service. Unfortunately over 50 percent of residents choose not to renew leases based on controllable reasons such as less than adequate customer service, lack of responsiveness and dissatisfaction with maintenance requests. Exceptional customer service is truly meeting the residents’ needs in a courteous and professional manner. It’s not only simple but it’s free! Set up a follow up system for prospective residents, new residents, completed maintenance service requests and mid-lease term. These are just a few ideas that will not only please residents but just as importantly owners by increased property NOI’s and values.
Another valuable resident retention strategy is to focus on providing residents with value, and not just in terms of dollars and cents. Value is perceived by the resident as how easy and enjoyable it is to be a resident. Residents’ loyalty is accomplished by making life easier, less stressful and more convenient on a daily basis. A relatively effortless gesture for some may be providing that morning cup of coffee or accepting a package for them while they’re away. Also, allow every resident to provide their feedback by requiring each staff member to conclude every conversation with a resident by simply asking them “Is there anything we can do for you or your home today?” It will not take long for the residents to acknowledge the value of services offered.
The majority of turnover is controllable so adjusting the focus to exceptional customer service and communication is a must to increase resident retention and ultimately clear financial rewards in the form of increased NOI’s and property values. For example, a 300 unit community that reduces turnover by 5% will grow net operating income (NOI) by $60,000. What owner wouldn’t appreciate the increased NOI while providing exceptional service to their residents?