CREJ - Multifamily Properties Quarterly - August 2021
Turning an apartment to pre pare for new renters can be quite overwhelming for property management, and as the busy summer moving season continues, it will feel this strain even more. The cost of getting an apartment move-in ready is dependent on the trend of renewals, and the nationwide rate of residents who renew their leases is currently at more than half. The time it takes to get homes ready varies depending on how old the community is, how long the prior resident lived in the apartment home and what condition it was at the time of move out. Many companies in the industry use seven working days as a guideline to turn a home, but management groups expect five. That being said, research shows that few on-site teams can meet these deadlines consistently. In reality, it’s taking 15 to 25 days on average, and the lost rental days and invoice processing cost savings ($6-$8 per invoice) are costing communities time and money. Turning quickly provides additional revenue and helps onsite teams leverage their bonuses and increase resident satisfaction scores because resident service requests are handled timelier.
The No. 1 challenge for a property manager in multifamily living is resident retention. Many residents get frustrated when maintenance requests are not completed promptly. But the residents don’t recognize that on-site teams log hundreds of hours working on getting new homes move-in ready, often unintentionally neglecting their current residents’ needs. In order to really succeed at resident retention, a community must set itself apart from others. Whether that’s offering top-of-the-line amenities such as fitness classes, pet walks, home cleans, valet trash and recycling cleanup, or simply having an attentive staff, the “extras” make or break a resident’s experience. With many communities around the country experiencing hiring issues, it’s more important now than ever that communities correctly allocate their staff to keep their attention on what’s important: setting themselves apart from others. We find that investing in an apartment turn service is like adding on five or 10 days of additional rental income on every turn. That’s 2%-3% in revenue growth over a year. This takes away the burden of maintenance teams chasing down “no-show” vendors or walking every apartment after each turn operation. Instead, high-salaried maintenance technicians could be clearing resident service requests to boost current resident satisfaction and online reviews. Having a well-trained apartment turn team that possesses the skills and knowledge to perform at a consistently high level and speed is the key to decreasing those vacant days, increasing net rental income, never missing monthly turns budgets and improving resident satisfaction. To truly understand the cost involved in turning over an apartment home, the community team needs to break down the number of services needed in every vacant home. Then multiply that by the number of homes needed to be ready for the next resident to move in comfortably. To demonstrate the actual cost of an apartment turn, here is a look at the labor savings a 300-home multifamily community can realize: • 15 hours per week spent on contractor management (emails, text messages, phone calls, meetings, access to homes, etc.) at $27 per hour during peak leasing season (16 weeks), which equates to annual savings of $6,480. • 10 hours per week at $27 per hour during the regular season (36 weeks), which equates to annual savings of $9,720. • Total annual labor cost savings: $16,200. For that same 300-home community, there’s quite a bit of opportunity to increase the annual rental income. For example, if the average monthly rent is $1,500, it equates to $50 a day. This means if the apartment turn service decreases the turn time by five days, that’s a potential increase of $250 per unit. If that community typically turns 180 units a year, there’s a potential total annual rental income increase of $45,000. This means that in one 300-unit community, the total annual fiscal impact could be $61,200. Communities can use these savings in various ways, like providing bonuses to their hardworking staff, investing in new programs and amenities for their residents, or performing seemingly endless renovations to the property. While the financial savings are staggering, the benefits of quick apartment turns go beyond financial. Handling apartment turns in-house can be a logistical nightmare and requires using resources that should be devoted to keeping current residents happy. Deploying an apartment turns partner allows community professionals to focus their attention on other essential resident needs. steve.davis@valetliving.com michael.peralli@valetliving.com