The peak rental season is here, and so begin the lease renewal negotiations between property managers and residents. Even in today’s rental market, where filling units quickly is not the primary challenge, lease renewal rate is still a key success metric in property management.
Why Lease Renewals Matter in These Times
1. Keep good residents for longer
You might be able to fill vacancies fast when demand is sky high, but that doesn’t mean it’s easier to attract quality residents you can trust. Property managers spent a lot of time screening applicants, getting them moved in and settled. If your current residents know the rules, respect the property and pay rent on time, why would you go through that process all over again, with new applicants whose trustworthiness is uncertain?
2. Avoid losing time and money
Unit turnovers are not cheap. The national average cost of a single unit turnover is estimated to be $1800, but it varies significantly based on the state of your property and the market you’re in. In big cities (or for bigger portfolios), the cost can be quite substantial and hurt the bottom line of a property management operation. There’s also rental revenue loss when a unit is unoccupied.
After previous residents move out, getting their apartments ready might take longer than expected. The process could take up to 5-7 days, which include inspection, cleaning, painting, maintenance, and marketing, to name a few. Not to mention the time property managers need to spend screening new renters and handling their move-in paperwork.
A high unit turnover rate puts real strain on your business, so boosting lease renewals should be the goal of property owners and managers, no matter the market environment.
How to Boost Lease Renewals and Avoid Unit Turnover
Here are two main ways property managers can reduce unit turnovers and improve lease renewal rate:
- Offer a simple renewal perk
Depending on market conditions, lease renewal is often accompanied by a sensitive negotiation over a potential rent increase. In these situations, it’s important to make the transition as easy as possible for your residents. One great way to do that is offering them a simple perk — such as Obligo’s Renewal Incentive — that puts cash back into their hands and incentivizes them to stay in your property.
Here’s how it works: when your residents renew their leases, you can offer to upgrade them to a deposit-free lease. All they need to do is sign up for Obligo’s deposit-free service as a perk, and they will get their previously paid security deposit back — a great beginning to a new lease term! Our integrated automation will take care of engaging your residents and communicating next steps. Most importantly, because your residents signed up for Obligo, you retain the same protection as if you kept their deposit.
Obligo’s nationwide survey shows that renters are 20% more likely to renew their leases if landlords give their deposits back at renewal. Property owners and managers have seen similar results after partnering with Obligo.
“Residents prefer deposit-free rentals versus moving and handing over a large cash deposit at another property.” said Ben Nguyen, property manager at Real Property Management® Heritage. Using Obligo’s deposit-free service helped him boost renewal rates by 24% and avoid unit turnover.
- Provide a better resident experience
The best way to keep residents in your property is to keep them happy. Moving out is one of the most hectic times in the rental lifecycle, and many renters move because they have to, due to rent increase, bad landlords, or subpar amenities. Therefore, providing a great resident experience will be instrumental for lease renewals.
Deposit-free living is becoming a welcome amenity for renters across the country. Obligo’s deposit-free solution lets qualified renters keep their cash to invest, save, travel, or spend, which they’re always happy about.
Obligo’s integrated deposit-free solution ensures that your residents can enjoy a seamless customer journey. But more importantly, it will streamline your property management operations and save you valuable time from manual tasks. Now you can use that time to focus on providing great customer service, building a community and fostering a positive experience for all your residents.