Despite indications that the number of apartment renters electing to move out at the conclusion of their lease is easing up, multifamily firms are nevertheless working harder than ever to lock in renewals, due in large part to downward pressure on rents for new leases and weaker occupancies. That doesn’t mean it’s time to throw in the towel. Instead, seasoned property management vets from progressive multifamily firms say there are still plenty of tools left in the strategy box to keep loyal residents happy and coming back for more at the conclusion of their lease.
Here are the top 10 tactics suggested by a panel of industry experts who are revving up their renewals.
1. Start renewals before lease-up. “We just started a new program to renew our residents two days before they move in,” says Harlan Krichman, CEO of Philadelphia-based Resource Residential. “In an office of four leasing people, we have taken one person and turned them into a resident concierge: All they deal with is resident relations, and they are paid on lease renewals. They call on residents two days before move-in to see if they need anything. They call on the resident two days after they move in, then two weeks later, then two months later, and so on to maintain high touch throughout the lease duration.”
2. Keep advertising on the down low. “Today’s renter is savvy and is on the Internet,” says Mark Fogelman, president of Memphis, Tenn.-based Fogelman Management Group. “There’s not much you can do about pricing available via the Web, but having a $599 rent advertisement banner on your building when your renewal residents are paying $799 is just bad business.”
3. Leverage the power of your property. Revenue management programs can offer flexibility in unit pricing and terms elsewhere in a community, and residents might want to either downsize to save money or upsize to get a roommate. Likewise, corporate units and common areas can be used as sweeteners to the renewal discussion. “You could give the renewal customer access to the clubhouse for an event or give the customer a guest suite for a weekend,” says Julie Smith, president of Greenbelt, Md.-based Bozzuto Management Co. “There are a host of things you can do with the property itself to reward residents for their loyalty and make them feel like they are getting additional value.”
4. Over amenitize and get social. Getting people to socially activate in a community increases the sense of being at home while also offering an entertainment alternative to budget-stressed residents. “One of the things we did at all of our properties was to purchase outdoor movie theaters for our pools and a couple of times a month, we will have a drive-in movie night,” Krichman says. “That has been tremendous in getting people together.”
5. Make capital improvements. Not only do in-unit rehabs provide immediate value to the renewing resident, they also improve the underlying asset value of your property. From upgraded appliances to lighting fixtures to kitchen and bath remodeling, “there are plenty of opportunities to make capital improvements to retain the renters and improve asset value,” Fogelman says. “It’s amazing how happy you can make a resident by putting a new refrigerator into a unit.”
6. Get a jump on it. Capital improvements don’t have to be bargained for during renewal discussions, and they need not be large, either. Resource Residential makes seemingly casual visits to residents two weeks before a renewal letter even goes out, and uses the occasion to perform unrequested minor upgrades to lighting and bathroom fixtures to keep positive impressions high.
7. Procrastinate. Why not put off now what you can more effectively accomplish at a later date? Bozzuto has selectively been working to extend resident leases as they expire, letting recession-wary residents lock in for another couple of months and make a longer-term renewal decision when they feel better about the economy. “You want to make sure you simultaneously are managing your expirations,” Smith says. “But if you can keep a resident three months longer, you are ahead of the game.”
8. Relinquish the security deposit. If you have a longer-term resident who has a great payment track record and has otherwise been a great resident, there is no reason to keep a security deposit on them. Property managers agree it’s fine to either give back a deposit after a year or return it in installments. “It’s one of the best retention strategies I’ve heard in a long time,” Fogelman says.
9. Get handy. Most property management firms have access to maintenance and/or cleaning staff that can be availed to the renewal resident looking for a little bit more out of their monthly rent check. “There are a lot of things you can do to add value, including offering a couple of hours of handyman work,” Smith says. “Leverage the talent and availability of your personnel on-site. A jump start on a cold morning could be all you need to renew a lease.”
10. Don’t renew leases at all. We’ve made a conscious move to not renew leases,” says Kathy Whitman, executive vice president of Dallas-based property manager LumaCorp. “Once your initial lease expires, we take very good care of you and hope that you’ll stay with us for a very long time month to month and appreciate our customer service and not have any reason to move. Our turnover has decreased since implementing that policy.”