How do you measure tenant retention?

1 What is tenant retention?

Tenant retention is the percentage of tenants who renew their leases or stay in the same property for a given period of time. It is also known as lease renewal rate or resident retention rate. Tenant retention reflects the satisfaction, loyalty, and engagement of your tenants, as well as the quality and value of your property and services. A high tenant retention rate means lower vacancy and turnover costs, higher rental income, and more referrals and reviews.

2 How to calculate tenant retention?

There are different ways to calculate tenant retention, depending on the data and time frame you have available. One common method is to divide the number of tenants who renewed their leases by the number of tenants who had the option to renew in a given period. For example, if you had 100 tenants who could renew their leases in a year and 80 of them did, your tenant retention rate would be 80%. Another method is to divide the number of tenants who stayed in the same property by the total number of tenants in a given period. For example, if you had 200 tenants at the beginning of the year and 160 of them were still there at the end of the year, your tenant retention rate would be 80%.

3 Why is tenant retention important?

Tenant retention is important for several reasons. First, it reduces the costs associated with vacancy and turnover, such as advertising, screening, cleaning, maintenance, repairs, and incentives. Second, it increases the rental income and cash flow, as you can avoid rent loss, charge higher rents, and offer longer leases. Third, it enhances the reputation and performance of your property, as you can attract and retain more qualified and reliable tenants, generate more positive reviews and referrals, and improve your occupancy and NOI.

4 How to improve tenant retention?

Improving tenant retention requires a proactive and strategic approach that focuses on building and maintaining positive relationships with your tenants. To achieve this, it’s important to communicate regularly and effectively with your tenants, providing timely and relevant information, feedback, and updates. Additionally, you should provide excellent customer service and support, responding to their requests, complaints, and issues promptly and professionally. Furthermore, offering competitive rents and fees based on market research and analysis is essential. Moreover, it’s important to maintain and upgrade your property and amenities to ensure that they meet or exceed your tenants' expectations. Rewarding loyal tenants with incentives, discounts, benefits, or perks can also help improve tenant retention. Finally, soliciting and acting on feedback from your tenants will show them that you appreciate their suggestions.

5 How to measure tenant retention performance?

Measuring tenant retention performance is essential for evaluating the effectiveness and efficiency of your tenant retention strategies and actions. To do this, you can track and analyze your tenant retention rate in comparison to goals, benchmarks, and industry standards. Additionally, you can monitor and evaluate tenant satisfaction and loyalty scores and ratings, such as NPS, CSAT, or CES. Moreover, it’s important to assess and optimize tenant lifetime value and profitability through metrics like CLV, CAC, or ROI. Lastly, review and improve your tenant retention processes and systems with metrics such as TAT, SLA, or FCR to ensure they are aligned with your tenant retention goals and best practices.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?