Yet, we all know that achieving this requires time, thought, and dedication. To help you ease the process, through this blog, we will explain the economics of resident turnover and look into effective ways of improving resident retention.
Understanding the Economics Behind Resident Turnover and Retention
If you want to reduce resident churn and improve your company’s financial performance, you need to find out how to set and manage your budget effectively to enhance the quality of your operations.
In this case, there are two essential calculations to consider before planning any strategy: the lifetime value of a resident and the cost to acquire a new one.
While the lifetime value (LTV) of a resident describes the profit that you’ll make during the rent period, the cost to acquire (CAC) a resident represents the costs to fill a vacant property.
To calculate the LTV of residents, you need to multiply their monthly rent by the occupancy time and add additional costs that they save you from recruiting new residents.
To calculate the cost of resident acquisition (CAC), you need to divide the total amount spent on sales and marketing activities by the number of new residents acquired in a specific period.
Tying these two numbers together will tell you how effectively you are budgeting your income. If your acquisition cost is less than the lifetime value of your residents, it means there is room for investing in strategies to raise resident retention rates, upgrade units, or offer your residents additional values like referral incentives or resident events.
Still, there are many aspects of tracking and managing the financial situation of a property management business and ensuring its profitability. With 15+ years of experience in the industry, we can provide you with a qualified property accountant team to take the workload off your hands while you focus on expanding your business.
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Conducting exit interviews is a great way to collect insights from your residents and make informed decisions accordingly to prevent future turnover.
Are they leaving because they are dissatisfied with the unit or operations? Or do they need more space for their growing family? Asking these kinds of questions will provide you with valuable feedback for your property management team to act on or make last-minute offerings to leaving residents.
2. Watch Out for Emerging Trends and Changes
Both industry dynamics and resident expectations are changing constantly. So it is essential to keep track of changing single and multifamily market trends and implement cutting-edge improvements to your operations to improve the resident experience.
Evaluating emerging trends in the market and incorporating sought-after amenities, like 5G and fiber connection, a fitness center, or a pool, into your single and multifamily property can improve the overall experience of your residents and lead to more lease renewals.
Similarly, investing in PropTech technologies, like smart locks, video intercoms, smart thermostats, and resident experience apps, can boost satisfaction by making them feel more secure and comfortable.
3. Utilize Property Management Marketing (H3)
Applying property management marketing practices in digital channels is crucial for attracting prospective residents, expanding brand awareness, and getting valuable insights that will guide your strategies. Moreover, it is highly effective to build a digital community with residents and connect with them constantly to fortify their overall journey.
There are two ways you can utilize marketing strategies as a single and multifamily operator. First, you can use social media marketing, SEO, paid advertising, or Google Business to market your vacancies effectively.
Second, you can utilize email marketing or social media marketing practices to keep your residents up to date with your operations, services, and improvements and interact with them.
4. Take a Strategic Approach to Rent Increases
Retaining an existing resident is 2 to 3 times more profitable than acquiring a new one. Therefore, before imposing a steep rent increase to raise profit, you should consider the risks and determine if the increase is worth it.
According to the National Apartment Association (NAA), each leaving resident costs over $4.000 for companies. So it might be better to save that money for investing in encouraging good residents to stay or making smaller rent increases to not intimidate residents.
5. Focus on Improving Resident Satisfaction
According to an Invesp study, 89% of companies in any industry see achieving customer satisfaction through improved experience as a key factor driving customer loyalty and retention. The same facts apply to single and multifamily operators, and therefore, it is crucial to satisfy their residents with valuable operations and services.
What you can do is ensure that your units are in excellent condition, your operations are providing your residents with what you offered, and they can get 24/7 management support.
Still, even though you are providing top-notch services or operations to your residents, without creating a sense of community, it is not possible to turn them into loyal ones. To show that you care about them and make them feel at home, you can organize a community event or make regular visits to answer their questions and issues.
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It is clear that whatever your strategy is, resident retention is always tailored to the quality of your operations and services. Without providing exceptional resident service and ensuring satisfaction by answering all their needs and requests, it is not possible to turn residents into loyal ones.
But managing a single and multifamily property management company is not easy; if growth and profit are your goals, you need highly qualified professionals on board to ensure that your business is delivering high-quality services and operations for residents.
As the #1 trusted remote staffing solutions provider worldwide, we are here to help you meet the right talent experienced in single and multifamily management and deal with all the hassles of team building while you scale and focus on your business!
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