Magazine article Journal of Property Management

The Power of Online Renewals

Magazine article Journal of Property Management

The Power of Online Renewals

Article excerpt

ONLINE RENEWALS ARE A CORNERSTONE OF YOUR RESIDENT RETENTION PROGRAM

As the retail adage goes, "the best customer is the one you already have." This sentiment holds true for multifamily as well: The best renter is the one you already have.

Offering online renewals is an integral part of an overall resident retention program, even a game-changer for real estate management companies. Online leasing creates cost savings associated with marketing to new residents as well as helping to free staff time to devote to other sitelevel operations.

CALCULATING THE COST OF RESIDENT TURNOVER

It makes a lot of business sense to hang on to your current residents. Turnover at apartment communities can be costly. According to SatisFacts Research, the cost per move-out can be as much as $4,100 when considering:

* Average rent of $1,009*

* Average vacancy loss days of 45

* Average concessions $634*

*Source: Axiometrics-average asking rent and concessions as of December 2010

Even if this unit is re-rented for $50 more per month, it would take seven years to break even from the original move-out. Therefore, focusing on resident retention goes a long way toward helping property management companies greatly reduce turnover expenses.

USING THESE ASSUMPTIONS, HERE'S HOW THE MOVE-OUT ADDS UP:

Vacancy loss $1,513

Concessions $634

Leasing staff time/cost $170

Marketing costs $849

Hard turnover costs (i.e., carpet cleaning, etc.) $765

Maintenance staff time/cost $165

Apartment cleaning $71

Total Cost $4,166

ONLINE RENEWALS: THE TECHNOLOGY GAME-CHANGER?

The ability for residents to renew online via a resident portal generates impressive results. Leading multifamily real estate investment trust UDR, Inc., recently recounted the success it experienced with an online renewal product.

"Since we began offering online renewals [in July 2010], more than 80 percent of our lease renewals have been completed online, a phenomenal acceptance rate in such a short period of time," said Tom Toomey, president and chief executive officer of UDR. …

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