No Vacancy: 5 Steps to Retaining Tenants
If you have ever lived in an apartment complex, you know that your neighbor today might not be your neighbor tomorrow. Apartments, historically, are for the nomadic—people who are seeking short-term or temporary residence until they move on to more permanent pastures. Yet, more and more people, unable to qualify for a mortgage or wary of the American dream of home ownership have turned to apartment living as a long-term housing alternative. In fact, U.S. rental vacancy rates fell to their lowest in a decade for the third quarter, according to a preliminary report by the real estate research firm Reis, Inc.
While that’s good news for the rental housing market, monthly rents are steadily on the rise too, making it competitive for management companies to retain tenants. Here are some tips to help you keep the tenants you have from moving out:
1 Create a flawless move-in process.
It’s never too early to make a first impression in the apartment leasing business, particularly the one generated by front-office personnel, according to Stephanie Anderson, CAM, CAPS, who oversees 5,000 units on the East Coast as the portfolio manager/onboard specialist for The Franklin Johnston Group, a development and property management company based in Virginia.
The resident’s initial experience is the first opportunity for management to create a sense of community. “It seems obvious, but everything needs to be perfect. The paperwork has to be in order, and the property and apartment needs to be spotless the day the tenant moves in,” she says. She also suggests giving a move-in gift and scheduling a meeting between the entire office team and new tenant on move-in day to establish an immediate—and lasting—rental rapport. “You want tenants to feel like they want to live here forever,” Anderson adds.
2 Develop brand loyalty with value-based amenities and personal touches.
Once a renter moves in, don’t think you can’t lose them to the residential abyss just because you have a signed lease in hand. The idea is to make them a happy, repeat customer. While price might be the reason for leaving, the subliminal message is that the resident didn’t get what they wanted or expected in exchange for the price increase.
“You have to set a consistent experience. People feel secure and are loyal to a brand if they feel their basic needs are being met,” says Joanna Ellis, CEO and owner of Ellis, Partners in Management Solutions and co-owner of Renter’s Voice, an apartment rating and review site. “Demand for apartments is high right now, which drives up rents but that doesn’t mean renters can pay. You still have to deliver value and meet tenant needs and expectations to maintain occupancy.”
Anderson agrees that what drives rental value is whether residents perceive they are appreciated members of the apartment community. You can achieve that mind-set with innovative and inexpensive personal experiences—small touches and amenities that can add up, according to the property veteran. And she says it begins with external appearances. “The grounds need to be spotless, which includes the landscaping, but also the condition of the buildings and signage. If the shutters and front door are in need of painting or power washing, this makes the property look unsightly and can deter prospective residents.”
In addition, she suggests offering renters the option to personalize their apartments with painted accent walls during renewal time as a lease perk. “We offer a selection of four colors that are in line with our color scheme. We purchase the paint in bulk to save money and provide this to our painter. Residents love the idea of an accent wall. It’s something fun that adds an extra bit of personality to their home. The cost to the property is minimal compared to giving away concessions of reduced or free rent,” says Anderson.
Some complexes also give residents permission to paint their walls any color they choose, but make it a contract stipulation they must prime and paint the walls back to their original color before vacating or incur fees equal to what it would cost the property to reverse the color.
Other ideas: Implement a ‘Resident of the Month’ program to recognize and celebrate a tenant; plan a chef-prepared gourmet dinner; or offer free car washes. “You can offer renewal bonuses and upgrades, such as paying the water bill for one month, which is easy for management to budget,” adds Anderson. “Get creative. You don’t have to replace a countertop necessarily. It can be as simple as a new light fixture or ceiling fan, even an iPad.®”
3 Open the lines of communication.
To establish a positive tenant/landlord relationship, start a dialogue. While face-to-face interactions are encouraged, residents may not have the same schedule as the front office. Property managers can keep the conversation going, however, through marketing management tools to notify tenants about news and events. “You can use monthly newsletters created through simple software programs that integrate with email, such as Constant Contact,® to stay in touch with clients,” explains Anderson.
She also recommends connecting with apartment customers via the company’s website—or creating an online presence if one doesn’t exist. Landlords and property managers also can keep tenants up to date using social media sites, including Facebook, Twitter and Pinterest. For major communications and emergencies, Anderson also sends text messages to residents about scheduled events such as the water being cut off in a building at a certain time.
4 Provide exceptional customer service.
It seems logical that great customer service is a key factor in retaining rental clients but apartment horror stories are regularly featured on the news. Plus, renters now have online means to give feedback, and air any grievances created by inattentive property management.
“Poor customer service is the number one reason renters don’t re-sign,” explains Anderson, the National Apartment Association’s Certified Apartment Manager of the Year in 2013. Loud neighbors not being addressed and dog droppings on the grounds make the short list of gripes. One of the biggest complaints renters have about management is lack of follow through and follow-up on service orders, says Anderson. “If you don’t have a well-oiled team, it sets a negative tone. All this adds up to one thing—vacancy.”
5 Make rental life convenient for tenants.
Services that make it easy to be a resident also make it easier for landlords to secure a repeat lease. Tenants want convenient ways to conduct their apartment lives and business without hassles, a factor that comes in many shapes and sizes. Offer tenants benefits such as the ability to place a service request online, pay rent online without paying extra fees, extend office hours, provide Wi-Fi in common areas, or offer to walk their pets, suggests Anderson. And don’t forget to set up online renewals and send reminders in advance that it’s time to renew. “You want to make it easy for them to re-sign a lease,” she says.
At the end of the day, residents care more about how they live than where they live and want a worry-free lifestyle, according to Ellis. “Rental customers today are much more sophisticated. They are aware of a property’s pricing and amenities through public sources like the Web. Retention boils down to understanding residents and knowing what motivates them to stay,” she says. “Living in an apartment is an emotional experience. Physical attributes and other external factors are important but not the overriding decision for a renter to renew. The interaction must entail making sure the apartment is a home for the customer.”