If you’re reading this, you’re either interested in or already investing in buy-and-hold rental properties. You’re in this thing for the long haul.
With the real estate world having a rough-and-tumble time over the past few years, market competition and rising interest rates may have you questioning whether or not now is the time to buy real estate.
While we believe that yes – now is a good time – we also want to encourage investors with the best ways to maximize the long-term profitability of their current rental properties.
If there’s a hill we’ll die on, it’s this: real estate investment is a people-centered business. On all levels, success is built on a foundation of trust. That’s trust between the owner and the property management team, trust between investors and advisors, trust between residents and management, and trust between management and vendors.
Trust maximizes your potential for more than a few reasons, but we’ll focus on one right now: the trust of your residents.
How Must Does Resident Turnover Cost?
It’s commonly said that, for rental property owners, resident turnover and vacancies are the most expensive season. A low vacancy rate is important, but we’d argue that a low turnover rate is even more critical. They go hand-in-hand, but the lower your turnover, the lower your vacancies and the less you have to deal with the costs of either.
So how much does it cost?
When a resident moves on and moves out, you must anticipate:
- Cleaning Costs
- Repair Costs
- Administrative/Management Costs
- Marketing Costs
- Application and Screening Costs
That’s not to mention the potential costs that can come from a less-than-ideal parting – as in an eviction or otherwise poor circumstances.
Turnover costs can be a pain, but it the opportunity cost that really impacts owners. When you miss out on rental income, you bear the full burden of mortgage payments, HOAs, and property taxes – not to mention the missed income. If your properties linger vacant, it can quickly become a drain on your resources.
All in all, you could be looking at several thousands of dollars a month!
In short: property owners want to avoid turnover as much as possible.
How to Increase Resident Retention:
- Build real relationships.
- Provide prized amenities.
- Invest in top-notch property management.
- Listen to feedback.
- Invest in the right markets.
And, for the record – REI Nation is at the head of the pack in this regard. As per our last news update, REI Nation has maintained our average length of stay of seven years in Q1 2022. That beats the industry average of three years. Our vacancy rates sit under 2% and lease renewal is 78%.
Our track record is stellar because we recognize the importance of providing proactive, quality, and people-oriented services for investors and residents alike.
3 Benefits of Retaining Long-Term Rental Residents
#1) Relationship and Rapport
When your management team has time to get to know the residents (and vice versa), you can come to expect a level of stability from your investment that you may not otherwise have. The longer residents stay, the more your team becomes accustomed to their needs and circumstances. This makes accommodations more personal and thus, more meaningful. This creates happy residents who take good care of your property, are quick to communicate, and stick with changes.
#2) Reliability
The more your team knows their residents, the more they can trust their habits and patterns. We all know that new residents can be a risk. A screening only tells us so much, and there are times when bad actors simply can’t be anticipated by all the checks and balances.
Retaining residents eliminates this chance by allowing the development of stable, regular patterns in property upkeep, rental payments, and general behavior. This makes it easier to anticipate long-term projections for your property.
#3) Cost Savings
Lastly, of course, there’s the cost-saving element. Retaining your residents not only avoids the costs associated with turnover, but it creates that reliable stream of income investors rely on. It makes the most sense on a financial level to prioritize resident satisfaction. It’s one of the surest ways to get the most out of your investment properties, period!
Join a team that prioritizes EXPERIENCE: your REI Nation advisor is waiting for your call!
