How to boost your resident retention — and your bottom line

The average residential turnover costs nearly $4,000 per unit. 

By retaining your renters longer, you reduce your turnover rate and vacancy rate, and boost your net operating income (NOI). Yet many property managers and investors don’t track their resident retention rates as a key performance indicator. 

If you want to boost your property’s cash flow and NOI — and therefore your property’s value — start tracking and increasing your apartment resident retention.

What’s resident retention & how do you measure it?

Your retention rate simply measures the percentage of units that remain occupied and don’t turn over in a given year. You can look at it as the inverse of your turnover rate. 

For example, say you own or manage an apartment complex with a hundred units. If 40 of them turn over this year, you have a turnover rate of 40%. If the other 60 units remain occupied and the residents renew their leases, you have a retention rate of 60%.

Why renter renewal rates matter

Vacancies and turnovers devastate the returns on residential investment properties. 

Imagine the work required to turn over all 100 units in the example above. You’d have to clean out the units, photograph and list them for rent, schedule showings, do tours, screen tenants, collect security deposits, sign lease agreements. It’s exhausting just thinking about it. 

And that says nothing of the marketing costs.

In recessions and times of economic uncertainty, vacancy rates rise and it becomes harder to fill vacant units. Instead of sitting vacant for a few weeks or a month, units could sit unused for months on end. 

Turnovers are where most of the costs and labor of managing properties lie. Reduce your turnover rates, and you reduce both your expenses and your labor. 

Beyond cost there is an impact on the longer-term residents creating a sense of community and stability. People who move every year often don’t bother to get to know their neighbors. But when people live in a home year after year, they build strong ties to their neighbors. 

The stronger those ties become, the greater the incentive for residents to continue living there. A study by RealPage found that renters who don’t know anyone in the building have just a 29% likelihood to renew their lease. At one to three friends, that jumps to 38%; with seven or more friends, it rises to 47% likelihood. 

A separate report by the National Apartment Association found that residents will pay up to $200 more in monthly rent to live in the same community as their friends. 

Starting to see why resident retention matters?

15 resident retention ideas to boost NOI

Apartment communities with high renter retention rates perform better on every financial metric. 

Consider the following apartment resident retention ideas to boost your retention—and your NOI and property value. 

1. Maintain the property well

It sounds simple, and it is: don’t fall behind on maintenance. 

No one wants to live in a dilapidated building. No one wants to invite their friends and family over to a complex whose better days are a distant memory. It makes residents embarrassed to live there, and they’ll move on as soon as they can afford it. 

No other resident retention ideas on this list matter if you don’t maintain the property with pride. Hard stop. 

2. Send informal early renewal reminders

Every state has its own landlord-tenant regulations with prescribed notice periods for rent increases and lease renewals. 

You want to get ahead of those. 

Reach out to your residents a few months before their lease is scheduled to expire. Ask for an informal indication of whether the renter is leaning toward renewing or not—and why. 

That gives you time to make a case to those thinking about leaving. And that starts with simply asking what they want that they aren’t getting. 

3. Survey your renters

You need to know: what would entice your residents to renew their rental agreements?

That could mean more of something, such as new community amenities or in-unit appliances. Or it could mean less of something, such as less noise after 10pm. 

As touched on above, get one-on-one feedback from renters before they make a decision to stay or go. But you can also conduct community-wide surveys, asking what residents want. On the other end of the spectrum, you can casually ask renters about what they’d like to see more or less of when you bump into them in person. 

The better you understand your residents, the better you can give them exactly what they want in order to stay. 

Pro tip: Tenant’s are more likely to stay in your rental if tasks like paying rent and submitting maintenance requests are easy. TurboTenant can help. Tenants can conveniently pay rent online via credit card or ACH bank transfer, submit maintenance requests online, and even report their on-time rent payments to build credit through TurboTenant.

Make Renting Easy for You and Your Tenants

4. Consider adding community amenities

Communal amenities like workout centers, pools, hot tubs, saunas, working spaces, and covered parking are always a hit with renters. 

But they don’t always appeal to every demographic or renter pool equally. In Phoenix, a pool is a much greater attraction than in North Dakota. Likewise, a community of remote-working professionals would probably love an on-site coworking space, while a senior living community probably isn’t as interested. 

Note that you can charge extra for some amenities. For example, if you opened a coworking space available to the public, you could charge for it, perhaps with a discount for on-site residents. Likewise, you could add cover for some of the parking spots and charge for those specific spots. 

5. Improve in-unit amenities

Everyone wants their own washer and dryer in their own home. Everyone loves new, higher-end kitchen appliances. 

But some buildings have unique needs. For instance, if noise is a problem at your apartment complex, you could add better soundproofing between units. For that matter, you could just implement (and enforce!) a stricter noise policy. 

6. Add bedrooms

One apartment syndicator that I’ve invested with noticed that they had a harder time attracting and retaining residents in their one-bedroom units. They’re particularly hard to rent during recessions, as residents tend to move in with one another to save on rent. 

The units are large, at 730 square feet. So the general partner got creative, observing that by simply adding a new wall we could convert them into two-bedroom units. We can simultaneously charge higher rents, fill the units faster, and retain more residents with a cheap and simple change. 

That won’t work for every one-bedroom apartment of course. But it goes to show that you aren’t as locked into your layouts as you think. 

7. Organize more community events

The greater the sense of community in your, ah, apartment community, the more likely renters are to stick around. 

Start brainstorming community event ideas. Could you organize a cookout? A pool party? A happy hour or wine tasting?

What if you gathered community members to form your own team to play in a local rec league? 

You could throw a bake-off competition, or a fundraiser, or a family-friendly Halloween party. You can organize a holiday decorating competition, climaxing with a community holiday party where you announce the winners and award their prizes. 

Prizes which could serve you too, by the way. If you’re gradually renovating units anyway, you could offer a new kitchen to the winning resident for example. 

8. Allow pets

A study by Michaelson Found Animals found that residents stay 21% longer in pet-friendly apartment buildings than non-friendly buildings. 

Pet-friendly units also tend to fill faster, since pet owners often have such a hard time finding a home. Read: shorter vacancies and lower marketing costs. 

Note that “pet-friendly” doesn’t mean “free for pets.” Some pets do cause slightly greater wear and tear on your units, so you can and should charge accordingly. You can charge monthly pet rent for each pet, a one-time pet deposit, or a one-time non-refundable pet fee. Or you can charge a combination.

If you worry about dog messes in the public areas, you can require pet owners to submit their doggie DNA upon move-in. If a resident fails to clean up after their pet, you can submit the offending sample to services like PooPrints to identify the culprit and fine them. 

9. Respect privacy

Dog DNA testing notwithstanding, you do want to respect your renters’ privacy. 

Avoid visiting them at their unit except for emergency repairs and regularly scheduled inspections. Don’t call them unless it’s important. They want their space and their privacy, just like you do. 

You can and should maintain a friendly relationship when you pass them in the halls, asking after their kids and so forth. Just try to minimize the intrusion into their personal space — their home itself.

10. Screen for long-term tenants

It should go without saying, but screening tenants is arguably the most important single task you undertake as a property manager or owner. The quality of your renters determines the quality of your returns. 

But go beyond the typical tenant screening steps of running credit reports, criminal checks, and past landlord references. Also try to gauge how long they’re likely to stick around.

Do they hop from home to home every year? Are they working a temporary job? Did they just move here from somewhere else, or did they grow up here? 

Give preference to the rental applicants you think are most likely to stick around for the long haul. 

11. Offer long-term leases

You don’t necessarily need a detective’s magnifying glass to guess which applicants are likely to stay long-term. You can just ask them.

As you show units, ask about how long they plan to stay in the area, and how long they’d like to stay in the building. Bounce the idea of a long-term lease off of them to gauge their interest.

You can offer long-term leases with rent that stays fixed over the entire term, or one with a scheduled (but modest) rent hike each year. You can bill it as locking in a low rent hike now, rather than paying the full market rent hike a year from now. 

12. Non-renew the rotten apples

It might seem counterintuitive, but not every resident retention is good. 

Some tenants cause other residents to leave — you could keep one bad tenant and lose six good ones. Perhaps they’re noisy, or sell drugs in the parking lot, or otherwise make their neighbors uncomfortable.

Alternatively, they might mistreat their rental unit and cause far more damage than their security deposit or deposit insurance can cover. 

Get the bad ones out to make way for better renters who respect your rules and the community at large.

13. Offer residents most of their security deposit back at renewal

Who wouldn’t love to get their security deposit back when they renew their lease contract?

Offer to replace their security deposit with a deposit replacement. They pay less than their security deposit, and put some money back in their pocket while continuing to live in your multifamily property. 

14. Follow the market

As a multifamily operator, you need to keep an eye on your local housing market. 

In a cool rental market, retention becomes even more critical to buoying your bottom line. Vacant units can sit for a long time in cool markets, and may require expensive incentives to fill. 

Keep your finger on the pulse of the local rental market, so you know how aggressively you want to court renters considering renewal. 

15. Offer renewal incentives if needed

To induce your residents to renew, you can offer incentives such as unit upgrades, new appliances, even cash gift cards. 

Incentives aren’t necessarily a downside to you. Unit upgrades and new appliances help you too. They boost the market rent of the unit, and therefore the value of the property.

If the rental market is particularly chilly, you can offer a rent freeze for the next year, with no increase. 

Let the temperature of the market dictate how you approach lease renewal incentives.

Final thoughts

The greater your apartment resident retention, the greater your return on investment will be. 

Consider these and other resident retention apartment renewal ideas to minimize turnovers and vacancies — and maximize your cash flow and property value.