Most owners and property managers agree that turnover is a given and stands in the way of making a profit. The key to reducing tenant turnover is building a better relationship with tenants. This includes establishing more effective methods of communication between landlord and tenant, fulfilling maintenance requests in a timely manner to establish trust, and making the rent-paying process easier for the tenant. These essential factors are key to creating a better relationship with tenants that reduces turnover.
Why does turnover matter? The cost of turnover is expensive. The costs to take into account include the collection of overdue or unpaid rent, legal fees, marketing and advertising of the available unit, cleaning and repairs, lost revenue from vacancy, tenant screening of new applicants, labor for repairs, showings, calls, and processing paperwork. All of this can range in total cost from $1,000 to $5,000 per unit, depending on the size, location, repairs needed and time vacant, says Property Management Minutes1. Additionally, a survey of over 3,000 properties showed that the average unit turnover was a shocking 54%2.
Imagine an owner has a property with 10 units and an average 54% turnover. That results in $5,400 to $27,000 of lost revenue each year. By reducing turnover to just 40%, the owner would net an additional $14,000 to $70,000 over a 10 year period!
On top of this, the total cost calculated (explicit cost) still does not account for the opportunity cost (implicit cost) of what an owner could have done with that time and money it took to fill a vacancy.
Industry Parallels: Reducing Turnover (without increasing your time)
Today, ordering a present for the holidays, purchasing new music, booking a hotel, and paying for your morning coffee can all be done from your phone. Companies like Amazon, Apple, Hilton, and Starbucks all know that putting themselves into your phone is the way to create not only customers, but repeat customers. They build a professional relationship, and then use that relationship to retain customers and drive profit.
Likewise, shouldn’t managing your properties and paying your rent all be accessible from your phone?
You may only see a tenant if they come to your office with a problem or you have to go to them to collect or evict. In either case, the relationship is already damaged at that point. Instead, use tenants’ smartphones to build a professional relationship. Technology allows you to build a professional relationship with a tenant even when you may not actually see the tenant after they move in.
Today, people live on their phones. In fact, the global number of users on mobile phones surpassed the number of users on desktops in 20143, and the Pew Research Center shows that 9 of 10 Americans are online, with more having access to a smartphone than even home internet4. Responding to emails, catching up on the news, posting on Facebook or Instagram, and reaching out to family or friends no longer require people to fill out paper letters or log onto desktop web portals. Connecting to the tenant on their phone is like knocking on their front door. Over time, connections and touch-points build a relationship with the tenant and lower your turnover.
Overcoming Barriers: Executing Your (Not So) Simple Solution
So why doesn’t every property owner just build an app for their renters? Building out apps for smartphone users can get pricey and time-consuming. Also, who is going to manage this software and continue to fix it if your tenants experience any issues?
To address this issue, RentRedi has taken on the challenge of connecting landlords directly to the tenant’s smartphone. Our platform was developed for mobile use, making it easy for tenants to pay their rent, submit maintenance requests with video, and set reminders for themselves for utility payments, cable, and rent. When tenants have an easy and automatic way to pay rent, they are more likely to pay on time. When tenants have an easy way to submit maintenance requests, they are able to go on with their other tasks and the maintenance issue becomes less stressful. Less stress for a tenant means lower turnover.
Thinking Outside the Box
And yes, that box is the computer. The RentRedi app ensures that landlords and tenants can communicate more effectively via mobile notifications. This is probably the most underutilized tool that landlords can take advantage of to build a relationship and reduce turnover. Sending an email can end up lost among hundreds of emails that a tenant receives each day and often gets set aside for more pressing issues at the moment. Placing a call to a tenant may reach them, but oftentimes ends with an unreturned voicemail.
Mobile push notifications, on the other hand, show up on the tenant’s phone immediately and can be a great way to build a relationship if used strategically. Not only does RentRedi’s mobile messaging ensure landlords can notify tenants of important information—like a change in garbage day or rent reminders—but also allows the tenants to quickly notify landlords of maintenance issues, along with a 5-second video so landlords can more accurately assess the situation.
With an increasing population of mobile tech users, it is critical for landlords to adopt innovative ways of managing their properties and connecting with their tenants. Using platforms such as RentRedi reduces tenant turnover by helping landlords and tenants establish relationships built on communication, trust, and efficiency.