What is resident retention?

Resident retention is a measure of a property’s ability to keep its tenants over time. It reflects how successful the landlords and property managers are at encouraging tenants to renew their leases rather than moving elsewhere.

Maintaining a high retention rate is essential for multifamily properties. A high retention rate suggests that tenants are happy with their living situation, meaning more stable income, lower vacancy rates, and reduced turnover costs.

In this guide, we show you how to calculate your property’s resident retention rates. If your rates are lower than you would like, you can use our effective strategies to improve tenant satisfaction and boost your property’s success.

How is resident retention calculated?

Calculating your resident retention rate is a straightforward process that offers valuable insights into your property’s performance. It involves a simple percentage calculation where you divide the number of tenants who have renewed their leases by the total number of tenants whose leases were set to expire within a given timeframe. You multiply this result by 100 to get a percentage.

Here’s an example: Your multifamily property has 100 leases up for renewal and 80 tenants chose to renew. You divide 80 by 100 and times it by 100 to get a resident retention rate of 80%.

In the United States in 2023, the average resident retention rate was 56%. A rate above 60% is generally considered good, while rates closer to 70% or higher are ideal. Achieving a high retention rate signifies that your property is successfully meeting tenant needs and expectations, helping to attract prospective tenants and maintain financial stability.

Why is resident retention important?

The resident retention rate is a vital metric that impacts nearly every aspect of property management, from financial health to tenant satisfaction to strategic planning. By monitoring this rate, you can ensure the long-term success of your multifamily property.

Here’s why your resident retention rate is important:

Financial stability

A high resident retention rate translates to stable rental income. It reduces the frequency of vacancies, which can be costly due to lost rent and the expenses associated with finding new tenants, such as advertising and tenant screening. It also minimizes the costs of turning over a unit, which includes cleaning, repairs, and upgrades.

Benchmarking success

Your resident retention rate is a key performance indicator (KPI) that you can use to measure your management strategies, tenant satisfaction, and the competitiveness of your multifamily property in the rental market. An increasing rate is a clear sign that your tenants are satisfied and that your property management practices are on the right track. If the rate is dropping, it’s a prompt for you to improve your approach to ensure your property remains successful.

Reputation management

A high retention rate is an indicator of high tenant satisfaction in your property. When your tenants are satisfied, they’re more inclined to leave positive reviews and recommend your property to friends and family, helping to boost its reputation. This enhanced reputation helps to attract new residents and showcase your effective property management.

Strategic planning

Understanding retention rates helps landlords and property managers identify trends, forecast future performance, and make informed decisions about property improvements and management strategies. It can also help in allocating resources more effectively. For example, properties with lower rates might need to invest in property upgrades to attract and retain tenants.

Top 5 tips for improving resident retention

Your resident retention rate can be affected by a variety of factors, ranging from external influences like multifamily trends to controllable elements like the quality of your property management. Recognizing the importance of all the factors that impact resident retention is key to maintaining a high rate.

If you’re looking to increase multifamily tenant retention, adopting these effective strategies can help ensure your tenants are more inclined to renew their leases.

Build a tenant-landlord relationship

A strong tenant-landlord relationship is essential for a high retention rate. You can do this by being approachable, responsive, and accommodating of tenants’ needs. This will demonstrate that you’re committed to their satisfaction and comfort, making tenants feel inclined to stay in your property.

Maintain a good communication

Ensuring effective communication is an easy way to boost retention rates. Being readily available for tenants to share their queries, concerns, or feedback will make your tenants feel valued and heard. You can achieve this by offering multiple communication channels, such as a tenant portal or dedicated phone number, to accommodate different preferences. Keeping tenants updated about property news, upcoming maintenance, or any changes in the community will also increase tenant trust and satisfaction.

Improve security measures

Tenants want to feel safe in their homes. Upgrading security features such as better lighting, secure entryways, and surveillance cameras will demonstrate that you are committed to creating a safe environment for your tenants. Making necessary security improvements will also help attract new tenants, reducing the vacancy rates in your property.

Ensure tenant queries are resolved

Being available for tenants when they have questions or maintenance problems is important, but what really matters is how quickly and effectively you solve these issues. Fast and efficient resolution of tenant queries shows that you care about their well-being, which can boost satisfaction. You can implement a system for tracking and managing these issues, helping you to stay organized and keep tenants informed.

Surprise tenants with additional gifts or messages

Small gestures can make a big difference when it comes to retaining your tenants. There are various multifamily renewal incentives you can try, such as sending personalized birthday messages or offering a small gift to celebrate a tenant milestone. These actions show tenants that they are more than just a source of income, which can encourage renewals.

Improve your tenant retention with multifamily management software

Adopting multifamily property software is an effective way to boost your resident retention rates. Our software enables you to facilitate multichannel communication, efficiently track and manage maintenance requests, and build a strong landlord-tenant relationship. By simplifying and streamlining your property management processes, our platform assists in securing lease renewals and enhancing tenant satisfaction.

FAQs about resident retention