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The Real Cost of Losing a Tenant

The Real Cost of Losing a Tenant

If you’re in business, you’ve likely heard more than once that it’s more expensive to lose an employee and face the need to find a new one than it is to actively focus on retention efforts. It makes sense. You have a significant outlay to advertise the position, recruit, go through the vetting process, relocate the right applicant, train him or her, and invest in both salary and benefits. If you lose that individual, you lose not only all of that investment, but the time and productivity losses associated with a vacancy, as well as another round of the same initial investments to fill the position yet again. For this reason, wise companies make significant investments in their ongoing retention efforts.

Multifamily apartment properties are no different. Think about it. To get a tenant in the door, you must advertise the vacancy, then you must vet and screen the applicants, which takes significant resources in including time, effort, and money. You then must have the unit move-in ready, which always requires at least a small investment. And the list goes on. Once that tenant is in place, if anything goes awry and he or she is no longer satisfied enough to stay the term of the lease or renew, you are now faced with all the related expenses of losing that tenant and replacing him or her, and according to research conducted by the National Apartment Association (NAA), those expenses can add up to a whopping $4,000 for each move-out.

The moral? As a property owner, tenant retention efforts should be a top priority. And even the simplest efforts go a long way. How can you get your tenants to stay? Here are just a few ideas:

  • Communicate. Have an open door policy to encourage feedback and free flow of information, including keeping all tenants up to date on anything they should know about the property and its management.
  • Be responsive. When there is an issue, be attentive and quick to respond. Think of how you would like to be treated if you were the one making the request, and give it due diligence. Even if no real attention is needed, empathy is sometimes all people need or want.
  • Keep an open mind. Remember that while the property is your business, it’s home to all your tenants. For this reason, it’s recommended you keep an open mind when it comes to special requests. Do your tenants want an outdoor chicken coop? Is there room for the volleyball pit that seems to be in high demand? Would a community garden really be such a bad idea? Granting wishes within reason in order to help tenants achieve a more ideal living situation will encourage them to stay.

 

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This comment was minimized by the moderator on the site

Great Article! Do you have a link to the study that you mentioned above? I would love to see the breakdown in costs! Keep up the good work!

  Alex
This comment was minimized by the moderator on the site

Thank you for your feedback, Alex. The original reference to a NAA study was drawn from this article posted to Zillow: http://www.zillow.com/blog/pro/2012-09-27/the-cost-of-tenant-churn/

However, the very original study that's been updated many times over and referenced across the web, was performed by Satsifacts.com, and the link to the full report is here: http://multifamilyprotv.com/wp-content/uploads/2011/03/SatisFacts-The-Retention-Report-March-2011.pdf

  Class A Management
This comment was minimized by the moderator on the site

Thank you for focusing on the other side of occupancy coin, the side that recognizes the value of keeping a resident instead of having to replace them. I agree with your basic advise about listening and being responsive to resident requests when you can. Another area of resident retention that is often overlooked is the tools made available by communities to help residents perform reliably in terms of on time rent payments so that their unit doesn't have to turned. Communities that look to rent payment options as a value to their residents often find their resident populations remain significantly more stable.

  Ellen Calmas
This comment was minimized by the moderator on the site

Im so glad that you did an article on this subject.Sometimes I think that we get so caught up in the business aspect of housing that we lose sight of how our business is generated and that is soley through RESIDENTS. I feel that the only way to keep business going and stay a respected and reputable org is to make sure that your residents are priority one.Yes I understand that not everyone will be pleased with how business is conducted but its about appealing to the masses as bad as we may want to please every single person. I always look at things from the standpoint of a resident/renter point of view and think if it was me how would I like things taken care of. Taking that approach gives resident the comfort and respect for you that you need to maintain a good health relationship and business.But this was a great artice as it addressed allot of points that I stress on a daily basis.

  NAtwan Pratt
This comment was minimized by the moderator on the site

Loosing a tenant is always great loss for a property owner. It is important to be friendly with tenants and listen to their problems and queries carefully. It will definitely create mutual respect among tenants and landlords.

  Teri Walls

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