Oh renter retention, so easy to say, yet so hard to do. If you’re focusing all your efforts on finding new residents… stop right there—you could be spending major $$$ instead of making major $$$.
At LeasingKC, we have in-depth knowledge of what it takes to have successful apartments in Kansas City. Through years of experience, we’ve found that retaining your current residents is just as important (if not more) than finding new ones. Don’t fall under the curve.
To maximize your apartment’s growth, here’s everything you should know about apartment renter retention.
Why is renter retention so important?
“Renters come and go, right? That’s just the business.”
No, that’s just an excuse. Yes, renters tend to like the idea of having flexibility to move from place to place, but there’s a caveat owners and landlords often ignore. Most people don’t actually like to move.
Think about it: if you had the choice of staying in one place or dealing with packing, moving costs, rearranging your furniture to fit a new space… which would you choose?
We’ll take staying for 500, please.
All too often, we’ve seen apartments focus on gaining new residents while ignoring current residents due to the idea that “they’re probably going to leave anyway.” Our honest review on that mentality?—0/10, don’t recommend.
A better mentality? Paying equal attention to attracting new residents and keeping the ones you already have since they are both just as important. Boom. And that’s how you keep your apartments as full as possible.
Focusing on apartment renter retention can help you save money on marketing efforts and maintaining vacant units. In the long run, all that money saved equates to a higher profits, and who doesn’t want that?
Looking at money in vs. money out
Everyone knows what it takes to make a profit. You have to make more money than what you spend.
But if it were as easy as it sounded, you wouldn’t have to read this blog (don’t worry, we got you).
First, we want you to look at the lifetime value of a resident (LVT). The LVT is how much profit you make from one resident throughout their stay. So obviously the longer residents stay, the higher their LVT will be.
Here’s an example:
Say the rent for a particular unit is $800 a month and the average resident lifetime is 24 months. That would make the LVT $19,200. But what if you pushed to keep each resident an additional six months? You’ll gain an extra $4,800 from each resident instead of spending money trying to pull new residents in.
Alright, so let’s switch over to new residents.
Fact #1: You’re going to have to spend money to get a new renter; there’s no way around that.
Fact #2: You’re 100% in control of how much money you spend.
When it comes to new residents, you want to consider the cost to acquire a customer (CAC). The biggest question the CAC answers is “how much money am I spending to gain new residents, and is that money worth it?”
For this, you want to take a look at your marketing budget. If you spend $5,000 on marketing and gain five residents, your CAC is $1,000. On the other hand, if you spend $10,000 on marketing and only gain one resident, was that really worth it? You might have been better off focusing your efforts on keeping your current residents to boost your LVT instead.
Basically, you want to always make sure that your CAC is less than your LVT to make a profit. So that means the higher your LVT is, the higher the margin between the two will be. And how do you increase that LVT? Renter. Retention.
Ways to increase renter retention
When going through a renter retention plan, you’ll want to focus on keeping your current residents happy. How? Glad you asked 😉
Build a community through social media
Social media is a great marketing tool to get to know your audience while your audience can get to know you. When your brand feels more like a friend than a business, people may be more likely to rent at your apartments. Plus, they can actively engage with you and give instant feedback to make their experience even better.
Get to know your residents
Your residents are the reason you’re in business in the first place. They’re literally living with you, so in a sense, it’s a pretty intimate relationship (in a non-weird way).
Something as simple as monthly check-ins allows you to ask them how they’re doing and how the apartment is. You can even ask what they’re dream amenities would be. You don’t want someone to pop up around the corner with something your residents are willing to leave for.
P.S. Don’t go crazy adding amenities you can’t afford. If it’s something reasonable, go for it. If it’s not at the moment, plan ahead for the future.
Stay up to date with maintenance requests
If someone has maintenance issues, don’t just throw the request in a pile and say, “oh, I’ll get to it later.” Get to it now… or at least ASAP. When your residents know you fix issues in a timely manner, they’ll be more likely to renew their lease.
Be careful with rental increases
It’s common knowledge that rent inevitably increases, so your residents are probably already prepared. What they expect, though, is that the rent doesn’t increase to some astronomical amount because you want to see how much you can make. It may be tempting to spike rent, thinking even if your current resident leaves, a new one will pay the higher rate.
Again, 0/10 don’t recommend.
Consider this in terms of renter retention: If the resident leaves because the rent became too high, the unit is going to be vacant, and when a unit is vacant, you’re not making any money from it. For most apartments, a unit remains empty for 4 to 8 weeks. So that’s 1 to 2 months of rent you could’ve gotten from the current resident if you had focused more on renter retention. Also keep in mind that you’ll have to keep up with utilities, maintenance, cleaning, etc., so those are extra expenses you have to factor in.
At the same time, that doesn’t mean you should charge below market rent just to keep your residents. In the long run, that could seriously become detrimental to your overall success. In fact, an economic vacancy could hurt you just as much as a physical vacancy. So instead, make sure you stay within market value while avoiding crazy spikes that could deter your current residents.
Learn more about renter retention from LeasingKC
If you’re in the Kansas City area, let LeasingKC be your bridge between you and your future residents. LeasingKC is a rental listing site run by local experts to help people find Kansas City apartments, rental homes, condos, and lofts.
We also provide a variety of cost-effective marketing plans that allow property managers and landlords to maximize their investments.
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