Spending On New Residents VS Existing Residents

I started brainstorming new polls to submit to Grace Hill and decided it would be a good idea to go over the previous polls to make sure I wasn't overlapping a prior poll. So as I sifted through the literally hundreds of past polls, I came upon two that both shocked and depressed me. I'm hoping I'm reading the results wrong!

The first poll I saw asked how much communities spent in resident retention per month. Almost 50 percent of responses selected only $50 per month!! I couldn't believe it - how is it possible that communities were only paying $50 per month on those that are vastly more profitable than obtaining new residents? (the overall average was $136/month - larger, but not that much better)

So as I stewed on that info for a while, I kept going down the polls and found one that discussed cost per resident acquisition. As you can see, the average cost of acquisition was between $100 and $250 per new resident. So how much does that really translate into? Well, it's a little hard to say, but let's take the industry average of roughly 60 percent yearly turnover, a 150 unit property, and an average cost of acquisition of $175. If you average that out over a 12 month period, it comes out to $1,300 per month for marketing to prospects!

So here you have residents who are already living there, already paying the bills, and are much more profitable, and according to these surveys, these residents only get $50 (or even $136) per month of services compared to $1,300 for prospects. And people wonder why residents constantly move from one property to another!

[UPDATE:  As I'm republishing these blog posts on our new Multifamily Insiders site, these numbers still drive me crazy.  One day, our industry will find the ROI treasure trove of resident retention - I just hope I don't pull out all my hair before then!]