Strategies for Multifamily Resident Retention

Multifamily residents aren't moving as often they used to. That's good news for property owners and managers, but it doesn't mean residents aren't moving at all.

Resident retention doesn't happen by accident, and it shouldn't be left solely to residents' own devices. Rather, property owners and managers can—and should—design and implement proactive programs to discourage move-outs. Keeping renters in place can help to boost rental income and reduce marketing, leasing, and refurbishment costs of vacancies.

"Multifamily investors should make resident retention a top priority," agrees Diana Pittro, executive vice president at Chicago-based RMK Management, which manages 7,000 units in Illinois and three other states.

Staffing for Service

Retention starts with recruiting and selecting renters who are likely to stick around, but that's not the be-all and end-all of retention. Hiring, training, and retaining competent and likable professional staff is also important. If residents love your management and staff, they may be more likely to stay—and tell their friends how happy they are.

"A key component [in resident retention] is cultivating staff that's well-trained to meet a tenant's day-to-day needs and provide exceptional customer service," Pittro says. "From resolving complaints and answering questions to planning social engagements, front-line staff members play a pivotal role."

Retention by the Numbers

Resident retention hit an all-time high of 52.5% in the 50 largest U.S. markets in 2018, matching the previous peak reached in 2015, according to data analytics provider RealPage. Households that renewed paid 4.5% more rent on average than their initial lease.

That may come as a surprise, given the strong pace of multifamily housing construction and low unemployment. But other factors were also at work. Multifamily rentals faced less competition from for-sale homes as higher rates and prices made buying less affordable. High occupancy rates, especially in B- and C-class properties, meant renters who wanted to move had fewer options to do so.

Resident retention efforts may matter more in new, upscale properties in desirable locations due to competition.

At the metro level, resident retention in the 50 largest U.S. markets ranged from 46% to 62% in 2018. Milwaukee and Newark-Jersey City topped the ranks with 61.9% retention. Next on the list were Providence, Miami, St. Louis, Philadelphia, Cleveland, New York, Minneapolis-St. Paul, and Pittsburgh.

Retention Tips

Debi Wherry, senior vice president of operations at Fogelman Properties in Memphis, Tenn., says an effective resident retention program starts with understanding the profile of the property's renters.

"You have to know what they love and what makes them tick, and that is the profile you want to cater to," Wherry says.

Asking residents is one way to find out, but the approach itself needs to be tailored to their preferences. A formal survey may work in some communities while a question posted on social media may get a higher response in others.

There's no denying that demographics are also a factor in resident retention. Wherry says millennials want everything to be electronic, while older generations may still prefer to come into the office and talk to somebody.

Despite their preference for digital communication, millennials will show up for events.

"They want to come home, park their car, and have entertainment at their fingertips and a place they can socialize," Wherry says.

Watching a local sports team compete in end-of-season playoffs or enjoying an evening meal from a food truck parked on the property can help to create a sense of community.

Pittro recommends training staff to call residents (and their pets) by their names and pursue day-to-day interactions, hold special events, like online contests and Pet of the Month awards, and offer personal lease renewal appointments.

"We know from resident feedback that these extra personal touches make the most impact and lead to a higher percentage of lease renewals," Pittro says.

Resident retention programs may not solve every multifamily property challenge, but they can help keep residents engaged, lower vacancies, and reduce turnover costs.