Resident Retention: Who’s Ready For Lease Renewal Season (and Overcoming Objections)? via Property Management Insider

It’s that time of year! This is historically when leasing teams begin to focus on the annual heavy leasing season, or as we like to call it, Lease Renewal Season! For the first time in a couple of years, we’ve been experiencing a market that allows us to push rental rates. Don’t be surprised when your residents object strongly to this turning of the tide. After all, in the past couple of years, most parts of the country have had minimal or even no rent increases to speak of. In some cases, there have even been decreases in rent. So, now residents are being asked to pay more per month, and they are asking the very valid question, “Pay more for what?”

Now, before we brush these objections aside and settle into a mindset of, “It’s okay if we lose long-term residents. We can make more money by bringing in new residents at the market rate,” we need to revisit the truth about net operating income (NOI) and asset value. Based on 4th quarter national average rental rates, each time a resident chooses not to renew a lease, it costs the property an average of up to $3,900. (To calculate your average apartment turnover cost, click HERE.) This takes into account average vacancy loss, costs to turn and lease the unit, marketing, staffing, etc. Even if you’re able to re-rent that apartment for $100 more per month, it would take you 39 months, or 3.25 years, to recoup that initial loss. Resident retention remains the best way to protect your cash flow, your NOI, and asset value, even as the economy improves.

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