Benefits of Lease Renewals
An effective resident retention program offers many benefits. The most obvious benefit is lease renewals. Increased renewals result in a reduced number of move outs. Reducing move outs reduces turnover expenses.
This affects labor expenses for our team, contract and supply expenses. It will decrease vacancy loss or the marketing cost to find a new resident for the apartment home. We have saved expenses in a number of expense areas, and possibly limited some capital replacements.
the lease renewal will probably result in a rent increase. In addition, to the many areas of expense reduction (saving) we have also added revenue of a rent increase times twelve to the property rental income.
There is a wide range of value from a lease renewal. How well do we prepare to present the new lease offer to our residents?
Generally, a form letter mail merged to pull name, address and new rental rate are mailed a month or so, before the current lease expires.
The letter is generic confirming to our residents; they are an apartment number and a rental rate. Even more disappointing are preprinted letters, poorly copied, with spaces for the “required information fields.”
Retaining a resident will continue and increase rental income creating thousands of dollars. It has the potential to reduce expenses in a number of cost areas. Dedicating a little more time and effort to prepare a renewal offers a huge return on the time investment. Taking ten or fifteen minutes to personalize a lease renewal offer, might be 25% of a leasing persons hourly rate. Seems like a wise investment.
How to Personalize A Lease Renewal Offer
An effective personalized lease renewal offer should include:
Personalized details. Date the current lease will expire. Names of the lease holders. Identify current fees included in the existing rental rate; such as pets, garage, or storage, with specific details. I.E..Garage 1430.
If the current rental rate has been discounted with a recurring concession. It is important to identify this value.
“Your current rental rate of $925 reflects a discounted rate, from your original concession of $75 per month. This concession saved you $900 last year. As a valued resident we are pleased to offer you a rate of $950. This rate remains $75 less than the market rent for your apartment home. This rate will continue to save you $900 per year.”
(The use of rental concessions has many pro’s and cons. Depending on your location, it may or may not be a necessary tool. But if you use concessions, remind the resident often of the value they receive from the concession.)
Including Loyalty Rewards.
Recognizing a residents loyalty and years of residency is a great personalization tool. One option is to offer a discounted lease renewal rate based on the years of occupancy.
Another option is a renewal menu that offers apartment upgrades which increase in value based on the years of residency. Recognizing positive resident behavior is acknowledging perfect payment history. Including a discount in the new rent calculation for never having a late rent payment. Tells the resident, we recognize their compliance with policies and offer a reward for a behavior that has saved us from sending late notices or making phone calls to collect rent. Instead of rewarding a resident who has paid late with a waived late fee. Recognize the person who has paid on time.
Each and every of one these suggestions offers a personalized approach to the lease renewal. Again with minimal cost, or even time investment.
What other ideas do you have to personalize a lease renewal offer? Share your ideas in the comments below.It