Tenant Retention

Tenant move-out is normal and inevitable. People are promoted, transferred, and fired by employers. They become wealthy, suffer financial loss, get new jobs, marry, divorce, retire, and buy houses, any of which may be a valid reason for relocation. We focus our retention efforts on reducing tenant move-outs because of tenant dissatisfaction with the facilities and services we provide.

The author's experience indicates that the three most important retention factors are:

  1. Crime prevention,
  2. Maintenance of the property, and
  3. Enforcement of rules that ensure a tranquil living environment.

Apartment dwellers frequently have considerable mobility. If they become victims of a crime or are threatened by crime in your apartment complex, they will move, especially when they have readily available options (your competitors).

Tenants have an expectation that the water, plumbing, heat and cooling, appliances, and roofing, as well as other things, will function properly. A tenant comes home after a hard day planning to shower, change and be off to an important social or business event. The tenant discovers there is no hot water or no water at all. Most tenants will forgive that irritation one time. If it happens a second time or if a series of maintenance failures occur, the tenant is going to say, "I'm out of here." Cause and effect may be difficult to perceive because relocation takes time to arrange. But the decision to move happens instantly when the tenant is annoyed by failed or delayed maintenance or when the tenant's automobile is stolen from the apartment complex parking area.

The author has knowledge of an apartment management company staff, operating in a very hot climate, who told their apartment managers, "If an air conditioner fails on a Friday evening before a three day weekend, wait until the next business day to have it repaired because labor costs will be higher on the weekend." Unfortunately, the money saved was more than offset by increased vacancy rates, vacancy days, and turnover costs. The policy was eventually changed.

Experienced machinery users know that maintenance costs for heavy duty, high quality machinery are less than the maintenance cost for cheaper, low quality machinery. The same is true for buildings. Cheap low quality construction yields early, high, and continuous maintenance costs. Maintenance costs also tend to increase as buildings age. Allocation of maintenance funds and efforts should reflect these facts.

No person who holds a responsible position, no hard working tenant can afford to be disturbed by loud parties, loud music, barking dogs, or other things which diminish the peace and tranquility of the place where the tenant sleeps and expects privacy. Successful apartment managers establish rules and enforce them.

Marketing strategy and advertising also ultimately affect tenant retention. If your marketing strategy targets a stable segment of the population and your advertising reflects that strategy, you will tend to attract a stable clientele.

There is widespread belief among apartment management companies that providing recreational facilities, entertainment, and social events promotes tenant retention. The author believes that methodology is expensive and of doubtful value. The author has knowledge of an apartment management staff who stood at the parking area exit and handed out free doughnuts and coffee to tenants who were on their way to work. Nice gesture. But was it effective? The author has knowledge of a large number of activities carried out by the staffs of apartment complexes at considerable expense for the purpose of attaining and retaining the good will of the tenants. Unfortunately, the benefits, if any, are merely assumed. If you asked:

  1. "By how much has your activity increased tenant retention?" or
  2. "By how much have you been able to increase rent rates as a result of your activity?" or
  3. "By how much has your occupancy rate increased as a result of your activity?"
the answer may be a blank stare.

America is an entertainment mecca with entertainment professionally managed, professionally talented, and abundantly available in every variety. Does it make sense for an apartment complex to compete with recreational and entertainment entities? Most people who rent apartments are looking for a good place to live. Provide a good place to live and you will be successful.

Landlords or apartment management company agents are entitled to enter a tenant's apartment, after giving advance written notice, to perform necessary repair or inspection. The entry, appropriately executed, is authorized even if the tenant objects. Use this authority sparingly, as seldom as possible. An excessive number of entries into a tenant's personal space, no matter how valid the reason, will cause many tenants to start looking for another place to live.

Rent increases applied too frequently or for excessive amounts of money can cause tenants to look elsewhere for a place to live.

During the early days of the author's apartment management experience a Fortune 500 senior executive was transferred to a location near the apartment complex managed by the author. The executive leased an apartment for a few months while selling a house and buying a new one, locally. While in residence the executive used an apartment complex laundry machine. The machine malfunctioned, pulling a garment under the agitator and shredding it. The laundry machine agitator had to be removed to recover the garment. In those early days the author did not have a petty cash fund which could have been used to reimburse the tenant's loss. Because of bureaucracy at the apartment management corporate headquarters the tenant was never reimbursed. Retention of that particular tenant was never an issue; the stay was temporary from the outset. However, that tenant was definitely in a position to influence many prospective tenants. Little things mean a lot.