Ask any group of multifamily operators what they worry about or what keeps them up at night and occupancy will be at the top of their lists. Every day an apartment sits empty represents a lost revenue opportunity that can never be recovered.
Being in an industry where demand is typically driven by things outside of their control, it is important for multifamily operators to focus on what they can control to keep occupancy rates optimized. Retaining residents is one of those areas of focus.
Every time a resident decides not to renew, costs are incurred…advertising costs, turn costs and vacancy costs…just to name few. If a resident stays, all of those costs are avoided.
Of course, people do move for reasons that have nothing to do with the property. For example, they may get a new job in a new city or need to move closer to family for health reasons.
However, sometimes people move for reasons that could have been prevented. It’s up to multifamily operators to minimize those situations.
Here are three keys to help you keep more residents.
1. Build a sense of community
For many residents, feeling like they are a part of a bigger community is a very important aspect of apartment living. It’s almost like having an extended family – where people feel at home. When people have friends in the place where they live, it is harder for them to leave.
Building a sense of community should be more than an initiative. It should be a business objective for every property. Resources should be allocated to help foster this “feeling” that is so important to your residents.
Start by reaching out to your residents to find out what kind of events interest them. Also ask them if they’d be interested in helping organize the events.
Community building events don’t need to be extravagant or expensive. Things like book clubs, potlucks and movie nights can be held in common areas and require only a minor investment. If the residents are involved in planning the events, the effort required from your staff will be minimal.
Successful events are appropriate for the residents and the geography they are located. For example, in a property with many pets, a “yappy hour” event held in a common area would be a great way for residents to interact with each other and get to know the pets.
When you ask for feedback, listen to what your residents are saying and enlist them for help planning, building a sense of community can be a low cost endeavor with big rewards.
2. Provide an excellent customer experience
For those multifamily operators who survey their residents often, it is not uncommon to find that residents are happiest right after they decide to lease their apartment. As time goes by, they become less loyal and less happy with property management and their apartment in general. By the time renewal discussions begin, they may be at a much lower point on the loyalty scale than they were at move in.
That’s why it is so important for operators to stay connected with residents – all of the time – not just when it is time to renew. If you’re not living up to their expectations every day and providing an excellent customer experience, it will make the decision whether or not to get a new apartment an easy one.
Create processes that make it easy for customers to interact with you. Reach out to them on a regular, defined basis. Provide the training necessary for your staff to implement these processes.
When you receive feedback, act on it in a way that meets the expectations of your residents. A perceived lack of response will leave them feeling like no one cares and more importantly, like they can get a better experience some where else.
Providing an excellent customer experience requires everyone on the team to understand resident expectations and deliver what they’re looking for.
3. Avoiding the #1 reason for controllable non-renewals
Over the years, we’ve seen several surveys linking reasons for renewal (and non-renewal). The single question that correlates most with likelihood to renew is whether or not the resident has an unresolved issue. As many as 35% of residents report that they do. Yet look in the property management system and you won’t see all of those issues because all but the most recent service requests are closed.
The key is not whether issues are closed in our PMS, it’s whether the resident perceives they’re closed. Do you send a satisfaction survey after each service request is closed? Do you do a more personal follow up?
We recommend sending a simple two or three question survey after each service request. It’s unobtrusive since it takes less than a minute to complete and gives the resident a chance to tell you whether they consider the issue resolved. Even better, make a personal call to see if everything is fine now. It’s amazing what you’ll learn.
Bonus 4th Thought
Many times, pricing is blamed for non-renewals. We’ve done several studies across several different operators, and the data is pretty clear. Unless the rent increase is more than 10%, there’s very little change in renewal behavior. So a non-renewing resident with a less-than-10% increase may complain about the rent; but it’s almost certainly not the real reason they’re leaving. More likely, it’s a convenient way of avoiding a more socially awkward conversation about what they don’t like about you or your community. So unless rent increases are really high, don’t blame the rent. Dig a little more deeply and find out the real reason. (Note: this assumes that the rent increase is in line with market rents…i.e. an 8% increase when the rent is comparable to new rents does not change renewal behavior; an arbitrary 8% increase that is way above new rents would cause problems.)