What is resident retention in multifamily?

Resident retention in the multifamily industry refers to the ability of a property management or ownership group to keep its current tenants renewing their leases instead of moving out. It's very important in the multifamily sector for several reasons:

1. Cost Efficiency: Retaining existing residents is generally more cost-effective than acquiring new ones. The costs associated with turnover, such as advertising, unit refurbishment, and periods of vacancy, can be significant. By keeping current residents, these expenses are minimized.
2. Stable Income Stream: High resident retention leads to a more stable and predictable income stream. Frequent tenant turnover can lead to income fluctuations and uncertainty.
3. Community Building: Properties with high retention rates often have a stronger sense of community. Long-term residents are more likely to form bonds with their neighbors and engage in community activities, enhancing the overall living experience for all residents.
4. Feedback and Improvement: Long-term residents can provide valuable feedback about the property and its management. This information can be used to make improvements, address issues, and enhance the living experience, which in turn can contribute to even higher retention rates.
5. Market Reputation: Properties known for high resident retention may develop a positive reputation, making them more attractive to potential tenants. This can be especially important in competitive rental markets.
6. Indicator of Satisfaction: High retention rates are often an indicator of tenant satisfaction. Satisfied residents are more likely to renew their leases, implying that the property meets or exceeds their expectations in terms of maintenance, management responsiveness, amenities, and overall living experience.
7. Operational Efficiency: With lower turnover rates, property management can focus more on maintaining and improving the property, rather than constantly dealing with the logistics of moving tenants in and out.
8. Predictive of Future Performance: Retention rates can also be a predictive metric for a property's future performance. High retention rates can suggest sustained income and lower operational costs, whereas low retention rates might indicate underlying problems that could affect future profitability.

Resident retention is a key performance metric in the multifamily industry, reflecting both the financial health of a property and the satisfaction of its residents. Effective retention strategies can lead to a more stable, profitable, and harmonious living environment.