Resident Retention: Who’s Ready For Lease Renewal Season (and Overcoming Objections)?
It’s that time of year! This is historically when leasing teams begin to focus on the annual heavy leasing season, or as we like to call it, Lease Renewal Season! For the first time in a couple of years, we’ve been experiencing a market that allows us to push rental rates. Don’t be surprised when your residents object strongly to this turning of the tide. After all, in the past couple of years, most parts of the country have had minimal or even no rent increases to speak of. In some cases, there have even been decreases in rent. So, now residents are being asked to pay more per month, and they are asking the very valid question, “Pay more for what?”
Now, before we brush these objections aside and settle into a mindset of, “It’s okay if we lose long-term residents. We can make more money by bringing in new residents at the market rate,” we need to revisit the truth about net operating income (NOI) and asset value. Based on 4th quarter national average rental rates, each time a resident chooses not to renew a lease, it costs the property an average of up to $3,900. (To calculate your average apartment turnover cost, click HERE.) This takes into account average vacancy loss, costs to turn and lease the unit, marketing, staffing, etc. Even if you’re able to re-rent that apartment for $100 more per month, it would take you 39 months, or 3.25 years, to recoup that initial loss. Resident retention remains the best way to protect your cash flow, your NOI, and asset value, even as the economy improves.
Having said that, how do we effectively prepare for the lease renewal season knowing that we’ll be encountering serious objections? By placing a very focused effort on demonstrating value and reinforcing customer service basics! In other words, show your residents that they’re getting more than a roof over their head for the price they are being asked to pay. They are also being offered convenience, ease, and a sense of belonging.
Value is defined by how “easy” it is to be a resident in the community for the price being paid.
Our research regarding the Resident Life Cycle shows that there can be a noticeable drop in overall resident satisfaction approximately 120 days prior to lease expiration. Some comments we have seen more than once in Pre-Lease Renewal Surveys demonstrate some common frustrations:
“I don’t think I’ve ever met the manager or the current office team and I’ve lived here for two years. I only ever see the maintenance guy.”
“Communication with office staff is poor. I still haven’t heard back on the last two messages I left.”
“The staff has not been trained in customer service. Only in sales. Once you sign a lease they are unresponsive and indifferent to their customers.”
Value is made up of all the little conveniences and interactions that happen day to day. But collectively, they add up to the strongest reason for staying in a community and continuing to call that place home. Can your residents say that:
- When I contact the office with a question or concern, they respond the same day
- My service requests are completed quickly and properly the first time
- I can pay rent and submit work orders online any time of day or night
- The office accepts packages for me if I’m away
- The staff knows my name – and I know theirs
- I feel like a valued resident
- I’m proud of showing off my home and community (regardless of its age)
- I feel that others are looking out for me in this community
- I know some of my neighbors
- I feel welcome regardless of my age, race, family status, interests, etc.
Value does not mean: More or better resident events.
In fact, in the SatisFacts National Online Resident Study conducted in July 2011, “Social events/activities hosted by community” received the second lowest rating of all options!
Having a successful lease renewal season can’t happen by suddenly being friendly and accessible the day renewal letters go out. It’s a mindset of demonstrating value throughout the entire year. Why not get the team together today and talk about how you can put some of these resident retention ideas into action now and ensure your residents are “feeling the love” today and every day in your community.