Turnover. We're always going to have it. In some cases, turnover is good: saying goodbye to a delinquent or unruly resident who sucks up valuable staff time and resources. Some cases are uncontrollable: a resident is relocating to a new city or state, or they are buying a home. But most turnover is not only bad but something you can directly control.

Let's break that statement down.

"Most turnover is bad."

In the 2012 NAA Survey of Operating Income and Expense, the average national turnover rate was 54%. This number has remained fairly consistent over the past several years, but the bottom line for our industry is that on average a community has to replace half of its customers every year. 

Traditionally, our industry has accepted this with the thought that the units can always be leased again at a higher rate. A higher rental rate equals more income, right? Wrong.  Here's why:

 Taking into account all of the costs associated with turning and re-renting a unit, on average, a community loses $2,811 every time a resident chooses to leave your community. In some markets, this number is much higher, and if we look at tough economic times, you'll see this number got up to over $4,000 per turn. 

Even if you can re-rent that unit for $100 more per month, it will take over 28 months (that is more than 2 years) to re-coup that move-out cost. (By the way, how many of your residents stay for more than 2 years?)

If we apply that move-out cost to the NAA's report that the average national turnover is 54%, that means an average 300-unit property loses $455,382 every year! (162 turns x $2,811)

On the flip side, if you are able to reduce your community's average turnover by just 4% (that is saving 1 notice to vacate per month for a 300-unit property), you'll be adding $33,732 to your bottom line ($2,811 x 12). 

As we're wrapping up budget season, I don't know about you but I'd personally like to have that additional $33,000 to work with!

In my next post, I'll talk about the 2nd half of my statement that the majority of that 54% turnover is something that you and your team can control.