Last modified on September 7th, 2022
By Marc Frenkiel
In part one of this series, we discussed the macroeconomic conditions of today and the potential implications for your property management business. Essentially, rent and home prices have been skyrocketing. As a result, your residents may be postponing moving out until the market normalizes. But that already may be happening
In an effort to cool the market and lower inflation, the Federal Reserve is raising interest rates, and demand is starting to slow. As demand slows, so does competition from other home buyers and renters, possibly giving your renters the green light to begin considering a move out.
While it is difficult to assign a blanket number to unit turn costs (different variables affect total costs, but here’s a useful tool), turnover costs (loss of rent plus rehab) are typically one of the largest annual line items. Combined with supply chain disruptions that are further increasing costs while delaying project timelines, resident retention should be an even greater priority within your overall leasing strategy.
Here’s what you can do to reduce friction in your renewal process:
Give renters what they want
AppFolio surveyed US renters to help property managers better understand what their residents want and how they perceive property management companies. The data was compiled into the AppFolio National Renter Motivation Report, with a key finding that 30% of renters view responsiveness, flexibility, and technology as more important now than pre-pandemic.
This should come as no surprise. Data shows that offices in the ten largest U.S. cities are only about 40% occupied, up 15% from a year earlier. Translation: people are spending more time in their homes.
So how can you prioritize responsiveness, flexibility, and technology (and ultimately empathy)?
Nobody likes to feel like they’re being ignored. Communicating with residents – even if it’s just a confirmation that you’ve received their question or email, can go a long way. However, responsiveness becomes more difficult at scale. Technology helps better manage communications by consolidating all communications onto a central hub. From there, residents can communicate with property management teams using any medium they choose (text, email, or online portal). As research shows that text message is the preferred medium of communication for Americans younger than 50, engaging in lease status conversations over text message is an underrated way of providing convenience for (certain) residents.
Technology can also help you stay ahead of renewal conversations. A consolidated communication hub makes it easier to touch base on various topics, including lease status and renewal likelihood. The resident’s answer — for example, they may be looking for a change of scenery, or lower rent — opens up the possibility to cross sell other properties in your portfolio.
Remote work is ushering in a new era of mobility, and flexible lease terms are becoming more desirable. As a result, it may be a sound business strategy to allow residents to choose the best lease term for their needs. If your company offers this, a robust portal that allows for rent payments to be made online is a straightforward way to keep track of these non-traditional leases. Additionally, online leases provide a seamless way for residents to review, sign, and submit renewal documents instantly, even from a mobile device. This feature removes a number of barriers, both physical and psychological, and can improve turnaround time.
With demand and competition for housing beginning to cool, it may be helpful to your bottom line to prioritize lease renewals over new move-ins by placing new emphasis on responsiveness and flexibility that comes with property management technology. For more renewal strategies, including a walkthrough of common objections and effective talking points to boost resident retention, check out the recording of our most recent webinar, Top Renewal Strategies in 20 Minutes. If however, retention is proving more difficult, tools in AppFolio Property Manager such as customized websites, virtual tours, Lisa — the AppFolio AI Leasing Assistant, workflow management, Unit Turn Board, and more, can significantly enhance your leasing operations. Feel free to schedule an AppFolio walkthrough to see how.