Lease Renewal

SatisFacts Research explored why residents renew their lease, and their findings showcased one extremely strong trend:  Residents care enormously about their connection to their neighbors.  What might be the most surprising aspect, however, is that our group of multifamily professionals seemed to underestimate related parts of the equation. In SatisFacts’ investigation, they listed a total of 27 factors from which residents could rate their renewal decision.  I have always been in the camp that believed a “sense of community” was a top factor in a resident’s decision to stay at their community, and sure enough, it was the 2nd highest rated factor.  And when we quizzed multifamily professionals, they almost had it pegged perfectly, listing it as the top factor in resident retention.  But what really blew me away was the clear theme shown at the top of the list – 4 out of the top 6 factors impacting the renewal decision all had to do with a resident’s connection with the community and neighbors!  (You can download the full results of this study, which also covers leasing preferences, by clicking here.)   Social activities (shout out to our resource for event ideas, ResidentEvents.com) was one of the big surprises, along with social media presence, which I discussed in my last blog.  Communities often put on some sort of community events through the year, but when asked how much they felt it impacted their residents’ decision to renew their lease, that factor was all the way down at 23rd on the list!  I......

In January, we quizzed the multifamily industry asking them what they thought drove residents to renew their leases.  We showed them a list of 27 factors (developed by SatisFacts Research) that might impact a residents decision to renew, and social media came in at number 26!  It turns out that we are very, very wrong.  (View the research report here for free) The reality is that residents truly do care about their community’s social media presence, and it can help in their decision to renew their lease!  SatisFacts Research investigated what factors drove the renewal process of actual residents, and found social media was the 3rd highest factor correlated to renewals.  So why do multifamily professionals rate social media so low when the residents themselves rate it much, much higher?  My guess is that when a community struggles to get engagement from residents, they believe that must mean that social media just isn’t important.  So let me share some potential culprits to why so many communities are struggling with attaining that engagement, and please feel free to add additional suspects in the comments below! Many Communities Have Given Up I can’t count the number of dead community social media accounts I have seen, and when all is said and done, it is a testament to the fact that social media is tough!  Cultivating an audience, finding a message that resonates with that audience, and then succeeding when the algorithm is stacked against you can be a very big challenge.  And for an apart......

Do you have a way to measure your residents' use of your property and your amenities?  Francis Chow, of Ellis Partners, who spoke at this year's National Apartment Association Education Conference and Exposition, showed the audience why understanding touch points with your residents can be so critical to understanding your resident's needs and how to impact their decision to renew.  His panel was speaking on the topic of using "Big Data", and he shared some great information: 3 months after move-in, engagement and loyalty drops Loyalty decreases when rents increase or even when residents anticipate a rent increase It is pretty common for residents to get "lost" during that period between 3 months, where they are active with the move-in process and move-in related maintenance requests, and the later renewal period.  Francis noted that the primary reasons for this lull is "staff engagement, resolving of issues and the ongoing 'connection with the resident' ".  So while we may be blissfully ignorant of their state of mind, thinking they are completely happy with their experience, they are actually trending downward in their connection with their community.  What I love about going the NAA Conference is that not only do I get great factual data, but it also spurs me on to analyze different elements of multifamily operations to see if there are improvements possible.  For example, if we are discussing the idea of using resident touch point data to adjust our operations to impact their experience, then there are two challenges I......

Owning a property is never easy.  Above and beyond providing for your tenants, you also have regulatory burdens to meet, taxes to pay, and marketing and promotion to engage in – at least if you want to keep your property relatively full.   This can all be accomplished through a variety of tried and tested techniques, each of which is selected based on suitability of use for your property and location.  One example of a technique that you can employ is helping to convert your leasing process to utilize automatic lease renewals. By implementing an automatic renewal policy, property owners can end up dramatically increasing retention and renewal rates while lowering their administrative burden at the same time.   Let’s take a look at three important things to keep in mind regarding this particular tactic: Higher Lease Renewal Rate – As mentioned, providing for automatic renewal will definitely help to keep your tenants in place and raise your renewal rates.  If you design the policy in such a way that they must provide you notice before the expiration of their lease if they do not intend on renewing, you will always have plenty of warning each and every time you need to begin seeking out a new tenant. Lowered Administrative Burden – Another benefit of implementing automatic lease renewals is that you will decrease your administrative costs and burdens as well.  Less letters and notices need to be drafted and mailed out, fewer clients need to be spoken with to determine their plans, ......

We just finished preparing our 2014 Lease Renewal Survey, and one thing shocked us right from the start:  18% of respondents gave exactly zero days warning for their renewal letter!  Let me explain:  If you have a 30 day notice to vacate, you would anticipate that a community would send out their renewal letter at least a few weeks or a month before that, which would give the residents time to digest the renewal letter and make a decision before they have to give their notice to vacate.  But 18% of communities told us that they give zero days or less notice, which means that if they had a 30 day notice to vacate, they were giving out their renewal 30 days prior to the end of the lease, which is the same day the notice to vacate is due, giving the resident zero days to make a decision.  Two communities surprisingly had a 60 day notice to vacate, and yet only sent out their renewal letter 30 days prior to the end of the lease, meaning the resident got their new rental rate 30 days after the notice to vacate was due. I've been in this situation as a resident, actually, and it infuriated me.  I felt steamrolled into making a quick decision, and even though I think I did renew (it has been many years, so I don't recall exactly), I had a newfound distrust and dislike for the community. So the question is whether this is simply the......

The more and more I think about apartment communities and SaaS companies, the more I realize how alike they actually are. In essence, apartments and SaaS companies provide a subscription service to their residents or clients. We are also focused on defining and improving the Resident Experience1 (RX) or the Customer Experience. There is also a little event that happens every year that we are both (or should be) keenly aware of - renewal time! Everything we do should be focused on making residents' experience so good that they don’t even have to think about signing another lease. How do you effectively track and monitor how happy your residents are leading up to the renewal? One of the tools that SaaS companies are building and using is something called the Customer Happiness Index or CHI. The CHI is a data-driven tool that allows you to take an objective look at your customers and determine how happy they are with the service(s) that you are providing them. It is a tremendously helpful tool that provides you a snapshot into how healthy your relationship is with a client at that point in time. CHI is certainly a tool or principle that apartment communities can borrow and tweak to make their own... so how about a Resident Happiness Index (RHI)? Now the tough part begins - deciding on what metrics and data you want to include in your RHI. If you've already defined your RX, then that's the best place to start. If you have not yet defined your RX, now is the time to s......

We are officially in the age of the customer. Why’s that? In the tech industry there are two things that you can count on when you build a great product: your competitors will (eventually) catch up with you and someone will come in at the bottom and disrupt price. Apple is no longer the only company out there that builds a “cool” smartphone. The same is true for multifamily housing—a new development rolls in and suddenly your community is no longer the only good option in town. Now, more than ever, customers are empowered and informed by a little thing called the internet... A potential resident knows everything about your property before they even think about filling out an application. They've seen your ratings and reviews on Google and Yelp. You can bet they've also Facebook-stalked your property to get an idea of what their future apartment and community looks like. I’m not joking—they know everything. This is why “customer experience” has become the sexy new term in the SaaS industry, and it's why “resident experience” or “RX” will have the same appeal in the multi-housing industry. Resident Experience (RX for short) is the sum of all experiences that your residents have with a community throughout the duration of their relationship with that community. Notice I didn’t say, “throughout the duration of their lease” — the RX begins long before residents sign their lease. Additionally, the focus of RX is all about the customer’s perception of those experiences. It doesn’t matter how well you think you are doing something—it's how your residents interpret the......

It is often said that people lease not because of the apartment community, but rather because of the leasing consultant, and that sentiment was echoed at this year's AIM Conference during the session, "Customer Cartography: Mapping the Prospect to Resident Journey".  Considering how similar many apartment communities are, it makes a lot of sense that the leasing consultant is the differentiator, and the one that makes the emotional connection with the prospect.  Strangely, I don't see that same argument for renewals.  It seems that many see the leasing consultant as almost like a doorman for the community - they show the prospect through the door to becoming a resident, but then all the residents become a homogeneous blob, where that initial connection to the leasing consultant isn't necessarily cultivated.  Instead, we let renewal letters do the selling the second time around, and if the leasing consultant leaves the community, there is rarely a plan of how to transition that relationship.  If the relationship with the leasing consultant was so important to the leasing process, why do we let it disappear so easily?  And in the context of this valuable relationship, do we understand how it adds to the cost of employee turnover?  My guess is that many companies calculate employee turnover purely on the base costs, such as HR costs, search costs, etc, but they haven't included the inevitable drop in retention for residents who were connected to that particular leasing consultant.  If the relationship with the leasing consultant is so......

The best tenants? Most often they’re the ones that are already living on your property. You’ve already marketed to them, qualified them, and have a guaranteed stream of rent coming in from the unit they occupy. It is, as we all know, so much cheaper to keep existing tenants than to recruit new ones, as detailed in this blog, The Real Cost of Losing a Tenant.

I have $800 of your money, and the only way you can get it is to move out of my property.

Today’s blog is meant to be a thought exercise, rather than any type of guidance.  I’m not suggesting that security deposits are bad, good, or anything in between.  But what I do want to do is throw out the idea that they have some unintended consequences.  The concept is pretty simple:  If I have some of your money, and you can only get it by leaving my community, does that create an incentive for you to do just that?  Potentially it does.

I think a lot of factors go into that, of course, such as whether your comps have reduced or eliminated security deposits, as that would mean a net cash gain for the resident, or if the resident was looking to buy a house, where that money would go towards a down payment.  Either way, there are potential negative incentives to renewing the lease, and I think it is important to address that.

What do you all think?  Is this an issue in the renewal process?