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What’s the one thing every single-family rental (SFR) investor wants? Resident retention rates are high. Ideally, we would all like to have a 100% retention rate, although anyone who has ever invested in SFR knows that perfect retention is unrealistic. Minimize the movement of residentsOn the other hand, if you know what you’re doing, it’s a very achievable goal.
The most effective resident retention strategies are learned from trial and error, but if you’re smart, they don’t have to be your Trial and error. For more than two decades, REI Nation has managed 8,000 SFR properties in the Southeast. With an average length of stay per lease of over five years, below are our proven resident retention strategies based on real-world experience with our single-family rental portfolio.
How do I calculate my retention rate?
Before we dive in, it’s helpful to review how retention rates are calculated. this This can be done quickly by dividing by the number of residents who moved out during the period 12 month period Compared with the total number of residents in the same period Then Multiply that number by 100.
obviously, If you only have one property in a year and only one resident moves in, your retention rate will automatically be 100%. Retention rates only start to make sense when you have multiple rentals. As a landlord, you also face more challenges as the number of properties you own increases, so maintaining a high resident retention rate becomes more complex the more properties you own. this This is our retention policy real Come in handy.
1. Make sure the rent you charge is fair
it’s not surprising Every potential resident wants the best property at the best price. When asked why they were looking for a new home, the vast majority cited price as the main driver. After the price increase, residents reported poor communications and poor property conditions. if you is providing Provide a quality experience for future residents, Then A quite High-priced homes will stand out.
Most tenants have one Budget Rent and will stick with it. Although most tenants expect rents to increase slightly each year rent increase Since inflation is inevitable, they tend to react strongly to unfair rent increases and will Very May move.
according to core logicAccording to statistics, the average annual rent increase for single-family homes in the United States in March 2024 was 3.4%. What we found internally In some markets, Competition and price points drive this percentage. Properties have seen increases as low as 0-1%, while other properties have still seen increases as high as 7% to 8%. It depends on the market and the property. However, landlords are still holding on to the pandemic mentality of double-digit rent increases in 2024, which will ultimately lead to high resident turnover. Most renters know they have options; they know how to research local market rents and won’t hesitate to move, even if it is inconvenient.
Of course, there are times when it makes sense to raise rents above average inflation increases. These higher increases are easiest to implement when the property is vacant,but if If you already have existing residents, you may be able to convince them to accept a higher rent if you clearly follow the points below and demonstrate that their best option is to stay in the existing property at a higher rent. Most residents don’t want the hassle of moving, and an honest and fair relationship is the best way to get the maximum rent increase without vacancies.
2. Maintain clear and honest communication
The importance of good communication deserves elaboration. this is something like this It costs you nothing, but receive great attention Almost every resident knows it. Communicating your property plans to residents will make them feel respected and valued. It also minimizes the potential for dissatisfaction, which can build up over time and almost always lead to residents leaving. Answer calls, respond to emails and follow up diligently with residents before and after work be executed It’s also an easy way to stand out from the competition. most residents Not used to it Having this kind of communication will make a difference.
3. Respond quickly to maintenance requests
Here’s a true story we encountered: A resident’s furnace broke down on the Wednesday night of the Thanksgiving holiday. They fully understand that Thursday is a holiday. However, if the stove is too cold, the home can be uncomfortable. Not fixed Quickly. They contacted the maintenance department of the management company and to their surprise, the call Answeredthe fix is not only Made on Thursday; management company even called on Friday to make sure the furnace was working and No other repairs required. The resident is a lifelong resident. As long as they need to rent a house, they will go Want to share space with this management company.
Most rental contracts Clearly Designate who is responsible for what. Even if residents were able They bear the cost of emergency repairs themselves and usually must obtain approval from the management company or landlord to proceed.
have a plan emergency Crucial. If you can’t commit to answering after-hours calls, hire a management company that offers this service. Emergencies will happen and how they will happen being processed Will affect your resident turnover rate.
Even non-emergency situations best solution timely. Put yourself in the residents’ shoes: Would you like to live with a broken furnace/air conditioner for weeks?
4. Make sure your property is of good quality
The term ‘prime’ is somewhat subjective and should be understood within the context of your local area and comparable properties in the area. Most residents do not expect to live in luxury properties unless they rent in a luxury neighborhood.
Nonetheless, most people expect facilities and decor to be of a reasonable standard. The key areas that need the most attention are paint (should be fresh and not peeling), plumbing (newer, clean fixtures and fittings), flooring and space.
Postpone maintenance Property problems can result in more costs for property owners, and minor question It also leads to resident frustration and high turnover. The more times residents have to pick up the phone and call the management company question, the less likely they are to sign an extension even if it’s a minor issue. When residents first walk into the home, if they see a clean yard, clear and cut back any bushes that can see the front door Clearly, new paint, new curtains, clean consistent floors, etc. If the property you are viewing is in poor condition and clear, it is difficult to expect good communication and a fair relationship need Repair or upgrade.
5. Provide additional incentives to retain residents
While this isn’t always necessary, in a stagnant rental market it may be worthwhile to offer additional incentives to encourage residents to stay longer. Upgrades such as painting interior rooms or updating the property are the most obvious incentivesbut you Get creative and consider offering your residents upgrades (this works great if you’re planning on upgrading anyway) or referral bonuses to help you secure residents for other properties. we all found it become Very effective regardless of price point or market.
Of course, these incentives only have an impact if you as a landlord are already following all other best practices.
Final Thoughts: Beyond
The goal of any landlord is for residents to not only tolerate the place they rent, but actively enjoy living there. this is the goal we strive to achieve every rental Excellence Property Management Group. We go above and beyond industry standards to provide you and your residents with the same exceptional experience.
The results of our efforts speak for themselves: the average stay of the properties we manage is 5.3 years, and the vacancy rate is less than 2%. Our residents are here to stay; entrust your property management to us and you can say goodbye to the worries of high turnover.
This article is provided by REI Nation
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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
