![\"Couple](\"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2013\/06\/Fotolia_49791409_Subscription_XXL-300x200.jpg\")
<\/p>\nFor most property management companies, how well resident turnover is managed is a huge part of the profit picture. There\u2019s no more critical component in managing turnover than simply and effectively anticipating those turns.<\/p>\n
Apartment buildings anticipate a 50 to 60 percent renewal rate, says Trudy von Keudell, property manager at Coast at Lakeshore East in Chicago.<\/p>\n
If 30 leases are up for renewal at the end of June, it\u2019s not uncommon for 15 of those to renew and an equal number to not renew. Those 15 residents may be buying a home or being transferred by their employer, or leaving for some reason having nothing to do with the building. \u201cSo you have to anticipate resident turnover,\u201d she says. \u201cIf you\u2019re not, you\u2019re not being realistic.\u201d<\/p>\n
Anticipation is vital because best practices in managing turnover start before residents move out, says Shailene Casio-Smith, vice president of Austin, Tex.-based residential property management company FirstService Residential Realty. The property shouldn\u2019t experience a mass exodus in one month or in the middle of its lowest leasing season. Ensuring it doesn\u2019t \u201chelps manage the property\u2019s turn costs, so there\u2019s not a spike in expenses, or a dip in NOI,\u201d she says. \u201cA lot of your lease optimizer software programs manage that for you.\u201d<\/p>\n
Many property managers find it helps to do as much pre-planning as possible, so they\u2019re ready to hit the ground running when a current resident departs. \u201cWe try to get the client to allow us to do a pre-departure inspection so we understand the full scope of work we have to do,\u201d says Dylan Pichulik, CEO of New York City-based XL Real Property Management, which manages individual apartments in small buildings for absentee owners. \u201cThat way we can line up all the necessary equipment, labor and materials we\u2019ll need.\u201d<\/p>\n
Von Keudell follows a similar tack. \u201cThe moment the person relinquishes control of the apartment, it\u2019s time to rock \u2018n\u2019 roll,\u201d she says. \u201cAs soon as those keys are turned over, we want contractors picking them up within the hour.\u201d<\/p>\n
The contractor has plenty of notice, because at Coast, residents are expected to give notice at least 60 days out of intention to move. When they do, von Keudell sends an email to give the painting contractor 60 days\u2019 notice.<\/p>\n
Speaking of pre-departure inspections, there are essentially two reasons for conducting such reviews, says Nick Alicastro, vice president of business development at Irvine, Calif.-based Western National Property Management. First, he says, departing residents should know what they will and will not be charged for. Second, it\u2019s crucial to evaluate the needs of the unit. \u201cRegardless of who pays, the work needs to be done,\u201d he says. \u201cIf the resident is vacating May 30th, I can have someone in there June 1st doing the work, and have that person done by end of day June 1st.\u201d<\/p>\n
Financial implications<\/b><\/p>\n
Numerous financial considerations are impacted by resident turnover, Alicastro reports. Property management should ensure turns take place in such a way as to minimize the number of days the unit sits vacant. If you can cut an average of 10 days vacant to five, you\u2019ve obviously become more cost-efficient. \u201cTo accomplish that, you need an in-house team to do the work, and a well-oiled leasing team to know when they can move that new tenant in,\u201d he says. \u201cThat leasing team needs to be doing everything they can to mitigate that leasing loss.\u201d
\nAnother concern is balancing the advantages of available make-ready inventory against the cost of that inventory. Some companies hire vendors to turn 10 units in three days. But the cost is high if those units are not already leased, and may not reflect an owner\u2019s cash flow goals. Some owners may take longer, perhaps 15 days, to turn over units and thus save on cost, he says.<\/p>\n
Alicastro is another who stresses the importance of staggering move-outs. Doing so allows your on-site team more flexibility in scheduling work throughout the month. It also allows more work to be completed in-house and less work by vendors. \u201cIt gives them breathing room, reducing the vacancy loss,\u201d he says.<\/p>\n
\u201cThe ability to have the teams turning units throughout the entire month increases the chance the units will get done in a shorter period of time, because they don\u2019t have 20 units to deal with all at once. They may only have five.\u201d<\/p>\n
Casio-Smith recommends adopting a consistent standard for the make-ready units that will be viewed by prospective residents, and training the entire team to deliver to those standards.<\/p>\n
\u201cWhat that does is keep the maintenance team in a consistent rhythm,\u201d she says. \u201cAnd it will reduce the man hours to turn a unit.\u201d<\/p>\n
Speaking of man hours, she also urges installing hard surface flooring throughout apartments as budgets allow. \u201cThat saves on carpet replacement costs year over year, and will save a day from turn time,\u201d she says.<\/p>\n
Quick and effective<\/b><\/p>\n
Resident turnover can be made still more expeditious by alerting residents to management\u2019s expectations, according to von Keudell. \u201cWe make an effort to educate residents,\u201d she says. \u201cWe conduct a move-in interview with each resident, spending 15 to 20 minutes with each one, on the front end, to educate them on issues for which they might face possible charges. That helps.\u201d<\/p>\n
Residents are also given a move-out document, informing them of how management expects them to return the apartment. \u201cIf you educate residents on things that could cost money, they\u2019re more likely to not cause a problem, and they generally give units back to us in really good condition,\u201d she says.<\/p>\n
At XL Real Property Management, Pichulk has found that his company can make resident turnover flow more quickly and economically by leveraging buying efficiencies. \u201cWe can access economies of scale for items like painting, using for instance a universal paint color that allows us to get volume discounts on paint,\u201d he reports. \u201cOur mission is to source the best vendors we can in smaller shops\u2014 whether painting or floor refinishing\u2014that will give us the most immediate response. With bigger companies there tends to be much more bureaucracy involved. And that can mean longer turnarounds.\u201d<\/p>\n
Lessons learned<\/b><\/p>\n
Asked what resident turnover management lessons they\u2019ve learned over the years, our experts wasted no time ticking off a number of them. Experience has taught Casio-Smith, for instance, that less costly apartment make-ready services aren\u2019t always the best option. \u201cIt\u2019s easy to romanticize the cheap rates, but it doesn\u2019t always mean you\u2019ll get quality service,\u201d she observes. \u201cAnd it could mean they have to go back a second or third time, wasting your turn days. The rule of thumb is just to vet your vendor\u2019s pricing to make sure you\u2019re comparing apples-to-apples service, and that you continue to get competitive pricing.\u201d<\/p>\n
Along similar lines, it\u2019s imperative that management thoroughly inspect work that\u2019s been completed, Pichulik says. \u201cIf we have to go back and make additional tweaks after the tenant moves in, it adds significant complications,\u201d he reports. \u201cThose include cost, time and scheduling, as well as the risk you face having trades in there working while tenants are also there.\u201d<\/p>\n
Alicastro\u2019s number one lesson learned? Make-ready units rent.<\/p>\n
\u201cIt\u2019s old school, but time and again we take over buildings, they have low occupancy and are suffering from low leasing velocity,\u201d he relates. \u201cWe ask how many units are made ready. And there\u2019s none. Residents and customers want to see the unit they\u2019re going to rent, look at the carpet they\u2019re going to get and see how their furniture will fit in. They\u2019re more likely to engage with property management if they can picture how they will live in the unit.\u201d<\/p>\n
The ultimate advice may be to limit the number of turnovers that have to occur in the first place. \u201cWe\u2019ll get notice of a resident\u2019s intent to move, pick up the phone and ask, \u2018Why are you moving?\u2019\u201d says von Keudell. \u201cAnd a couple times a month, we\u2019ll save a resident by finding out exactly what their needs are and matching our apartment homes with their needs.\u201d<\/p>\n
This article originally appeared in Multi-Housing News.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" For most property management companies, how well resident turnover is managed is a huge part of the profit picture. There\u2019s no more critical component in managing turnover than simply and effectively anticipating those turns. Apartment buildings anticipate a 50 to 60 percent renewal rate, says Trudy von Keudell, property manager at Coast at Lakeshore East […]<\/p>\n","protected":false},"author":450,"featured_media":7087,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_s2mail":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4],"tags":[589,142,855],"class_list":["post-10885","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-multi-family","tag-retention","tag-turnover"],"acf":[],"yoast_head":"\n