How to build a proactive resident retention program with Lori Hammond
How to build a proactive resident retention program with Lori Hammond
We all know resident retention doesn’t just happen. But how do you build a proactive resident retention and renewal program? Does it create real savings? And does the importance of resident experience management apply across all portfolio types? Lori Hammond from MRD Apartments and author of the Property Management Minutes blog talks about how MRD Apartments approaches resident retention and the real savings that they have calculated.
Turnover costs are calculated between $1,000 to $5,000. [4:10]
- Items costs are market-driven, but the components are the same - look at advertising, maintenance time-related costs, concessions, etc.
- If a single turn takes 3+ days, that’s about 24-hrs of maintenance time at $15/hr. Now add 6+ turns per month and it adds up quickly.
Maintenance is a finite resource. [7:00]
- Resident expectations are high and maintenance workers are in demand
- Between move-in and turns vs work orders - the balance is hard to keep
10% of the gross rent potential across a property is really spent on turning units [07:50]
- Turnover will happen, but what steps are you taking to minimize this impact?
- Can better direct these assets elsewhere
How does MRD think about resident retention? [09:25]
- Resident retention begins on the day that someone signs the lease
- Intentional process 365-days per year
- Key is that maintenance team and housekeeping understand their important role - they are critical component to the ‘everyday’ experience
What are some additional resident retention tips? [11:46]
- It’s all about connection! Be purposeful in the opportunities to residents to connect with staff
- Social activities is key
Are there resident retention goals across your portfolio? [13:00]
- Lens of how do we reduce turnover by 10%? The approach on this varies per property.
- Particularly in affordable segment, someone choosing to stay is a huge endorsement to the value being provided
- This is a group goal. Everyone is working toward it though one person is the point person
Lori Hammond is the Vice President of Affordable Housing for MRD Apartments. She has enjoyed a long career in property management working with both market-rate and affordable assets. This range of community sizes provides a constant flow of experiences to share on her blog, Property Management Minutes.
In addition to property management companies, Lori has had the privilege to work and stay active with the Apartment Association and the Affordable Housing Associations. With some of the properties in her group, Lori remains active in the day-to-day decisions for leasing and maintenance, which keeps her in touch with today’s prospects and challenges.
Nick Latz: Welcome home multifamily pros to the Resident Experience Podcast, episode four, where we're talking with Lori Hammond from MRD Apartments on how to build a proactive resident retention program for all property types, and the real savings you can realize. Is the resident experience a high priority across the affordable housing segment? What is the true cost of unit turnover? How do you increase resident renewals and retention? Well today, we answer these questions and more. I'm Nick Latz, your host, and I'm talking with Lori Hammond, Vice President for Affordable Housing across the MRD Apartments portfolio and author of the Property Management Minutes Blog. MRD Apartments is a residential property management and development company based in East Lansing, Michigan. For over 50 years, they have been building, owning and managing their own properties throughout the country. We are talking today about how you build a proactive resident retention program and the cost savings that you can realize. Lori, welcome to the show.
Lori Hammond: Thanks so much. It's exciting to be here.
Nick Latz: Glad to have you. Well, let's just get right into it. Can you tell us a little bit about MRD Apartments and your role?
Lori Hammond: Sure. Our organization is located in 11 states and we manage about 10,000 apartment homes. My role is Vice President of Affordable Housing and I oversee a group of 2,000 apartment homes.
Nick Latz: Got it. Okay, so the affordable portfolio.
Lori Hammond: Correct.
Nick Latz: Are you guys MRD, growing, selling assets staying the same? How are you thinking about your overall growth trajectory?
Lori Hammond: We started in the late 80s and really have been growing every year. One of the unique things about our organization is we have two owners and they have never sold an asset and continue to build. Now we're up to almost 10,000 homes and still have some plans for development in the next couple of years.
Nick Latz: In it for the long run. That's great.
Lori Hammond: Absolutely.
Nick Latz: Well, cool, so at Zego, one of the things we really focus on is helping owners and operators modernize the resident experience. We do a lot of research in and around this topic of resident retention in the overall resident experience. That's actually how we came across Property Management Minutes and your blog, Lori, and so I was wondering if you could tell us a little bit about that. How long have you been blogging?
Lori Hammond: A long time, almost 10 years, and it's kind of a rocky road. Some years, there's a lot of comments and involvement, you stay real motivated, and then it kind of slides off. I've been invited to come and speak at a couple different apartment associations and share information, but I just feel like it's a great opportunity to be able to share both things from my experience and ideas and tips, a marketing thing, a resident retention idea, and being able to get information out to a lot of people who are involved in property management, but don't have a company that has a big marketing department that's able to provide them with information and resources.
Nick Latz: That's fantastic. We've seen these types of resources, blogs, virtual events, be especially popular over the last 15 months because people aren't going to industry events. They're not kind of interacting with their peers face-to-face and trading notes. I think these have definitely become a great industry resource. One of the blog posts that I read that I really liked that you've done was called Adding Up the Financial Benefit of Reducing Move Out. In that blog, you talked about how turnover expenses are something to be considered for property owners, property operators. You mentioned when you add up the different costs like rent, concessions, maintenance, advertising, et cetera, et cetera, those turnover costs can be in the 1,000 to $5,000 range. That's what you've mentioned in your blog. I was curious, does that align with your experience at MRD as an operator?
Lori Hammond: Absolutely, and obviously, it's going to be a little different marketplace to marketplace, your cost on rent or your cost on carpet replacement. Those things are going to be somewhat market-driven, but there's always been so much emphasis, especially on the marketing side and looking at how do you analyze your cost of bringing every person to the property and turning it around and looking at what is the cost to your property for every individual that chooses to move out and being faced sometimes with the question what can you do to trim cost in your budget and looking at it, if we can be proactive and find the opportunity to address our turnover, we have an opportunity that impacts so many different areas. I mean, if you think about a turn taking three to five days, that's 24 hours of maintenance that's involved in that. Take 15 out, somebody you're paying $15 an hour, they're in there for 24 hours.
Right there, you've got four or $500 tied up in what's happening. There's just the balance of if somebody's doing this, they can't do that. If maintenance is working on six and seven turns every single month, how much of their overall time on the clock is spent doing turns and again, kind of re-engineer it, or step backwards, if you were simply able to reduce your move-outs by one a month and then take that number and say, if we saved three and $4,000 here, or $2,000, all of a sudden times 12 months, that rolls up to 20, $30,000 based on the expenses of your community.
Nick Latz: Sure, absolutely, and like you mentioned, maintenance seems to be a scarce asset these days, right, with maintenance workers in demand, and residents having higher and higher expectations around response, timing for work orders and maintenance requests. I think that's a good point around, hey, you don't really get any benefit from a resident satisfaction perspective when your maintenance resources are turning units, right, because they probably can't respond to the current residents as quickly.
Lori Hammond: If a person has to wait for a work order to be done just by the balance of time, we've got to move in and we've got a work order, you have to figure out how you balance that and keep them both in the schedule.
Nick Latz: Yep. Interesting. Okay, so one of the things I liked about your blog post is the quantification. I'm really into the numbers and you gave this hypothetical scenario and you said, "Hey, if you conservatively assume 40% annual turnover across a portfolio," and you just kind of split the difference between 1,000 and 5,000 and say, "Hey, it costs $1,800 to turn a unit," you mentioned that if you run the math, it comes to nine to 10% of the gross rent potential across a property is really spent on turning units. That stuck out to me because that's a big percentage. When you've talked about that with your colleagues at MRD or through colleagues across the industry and walk them through that math, how do people react? Do people understand how big of a cost this unit turnover really is?
Lori Hammond: I think just taking the time to step back and like you said, I mean, when you put it all together and you look at that impact, it's just alarming. Then I don't know, alarming is a great word, but I mean, it's almost nine, 10%. I mean, that's 10% of what you're doing with your money. Obviously, that's part of, I mean, turnover is what we do. It's maintaining the property, but if we don't spend it on this, we have it for something else. Where can you direct those assets? Whether it's financial assets for maintenance payroll or maintenance supplies, you can direct it to other ways.
Nick Latz: Yep. Given how big of an expense that can be the nine to 10%, how do you guys think about resident retention at MRD? How big of a priority is it versus other things that you prioritize like acquiring new properties or acquiring new residents?
Lori Hammond: Well, resident retention begins on the day that someone signs their lease and it's got to be a very intentional process 365 days a year. A big portion of that is making sure that our maintenance team and housekeepers realize the importance of the role that they play and what a person's going to decide to do with their lease for the next year. Every interaction that happens with our team influences a person's decision on whether they're going to renew or not. I honestly believe, and it begins on day one, the person is already deciding, "Am I going to stay here or going to move?" That's already in the back of someone's minds. Throughout the course of the year, the residents have so much more contact with our housekeeping team, the maintenance team, much more so than the office.
I mean, and now when we have the opportunities to turn in your work orders remotely, that's even less contact with the office crew. It's maintenance and does maintenance come to your home with a smile on their face and an attitude, or if you feel like it's beginning of a conflict, ask maintenance to come and work on your home, you're not going to renew. Emphasizing with both the maintenance and the housekeeping, how important their role is and that our entire group as a team is going to be involved in making a resident, have their decision on whether to renew or not.
Nick Latz: Yep. That makes a lot of sense. Do you, based on your blogs or based on your years of experience of operating properties, you touched on a couple there that were good ones, but any other resident retention tips or best practices that you've seen work well across your portfolio?
Lori Hammond: I think it's just the connection. Looking to give residents an opportunity to connect with the office staff. You might have breakfast on the go, you've got social media, just different things where people can feel like they're grounded into that group that they're having ... It's more so than just the place that I live. We can kind of facilitate it becoming the neighborhood where you have that connection. Then if you choose to move, essentially you could be leaving all of this behind. It's not just my square that I'm in, but it's my connection to the team. It's the social activities that they have. Like I said, breakfast on the go is to me, that's like one of the most fun things to have snack bags sitting out at the edge of the property and letting people grab a snack on their way out in the morning, or the events in the evening coming home at the end of the day for happy hour events and being able to bring families and kids and having a social activity where everyone has a chance to interact a little bit.
Nick Latz: Yep. No, we hear that a lot. The more the resident has a network, a community, friends at the property, the more that they know how to communicate with the staff, and sometimes that communication's in person, the resident values that. Sometimes it's more self-service, but the more resident feels like, "Hey, I know how to get things done at my property," the stickier they become and their likelihood of renewal. That's interesting. Do you guys have resident retention goals across your portfolio?
Lori Hammond: Overall, we always are trying to look at how do we reduce turnover by 10%? It's kind of, I mean, property property, those dynamics work a little differently. Personally, especially on the affordable portfolio for me, I see it being really important when an individual has the opportunity to move and they don't. On the affordable side, there's a lot with rent-based on your income. It's like as soon as someone has a full-time job or something happens, they're moving to somewhere else. When they stay and continue to renew with us, that vote of confidence just adds that much more value. I just was working with a manager with somebody who's lived on their property for 30 years. Just looking at that value and saying, "We've got to tie in to that value. I mean, that's a huge endorsement on our community and letting people know that this person has chose to keep renewing with us for 30 years," it's just awesome.
Nick Latz: Right. You mentioned, certain of your residents have the opportunity to move and elect to stay, proactively choose to stay, is that something that you can measure or is that something just kind of anecdotally you try to keep a pulse on?
Lori Hammond: Just try to keep a pulse on it.
Nick Latz: Yep. What role is tasked with resident retention across your portfolio? Is that one person, one group, or is it a group of people?
Lori Hammond: It's absolutely a group. I mean, there's going to be a point person, an assistant manager or a leasing coordinator that is going to be generating the activities or starting a renewal processing in the actual contact with someone, but making sure on our weekly team meetings that we're talking about the resident experience all year long. Making sure when we're going into someone's home and taking care of a service order for them, the attitude that we bring with us and how we treat them is, that's going to be the deciding factor way more so than whether or not someone got a $30 rent increase.
Nick Latz: Sure, sure. That makes sense. Okay. Lori, well, final question for you. In this podcast like we mentioned, we talk, we focus on the resident experience, we focus on retention and different touch points across the resident life cycle. Who are two other guests that you you'd recommend that we invite onto this podcast? Who are some owners or operators that you think are doing some interesting things and around this topic of resident experience?
Lori Hammond: It's so exciting right now. I mean, just like what you've talked about between blogs and Instagram and the different influencers that are out there, there's just so much information to give to people. Full House Marketing is a business that's kind of based in Michigan and two of their key people, Leah Brewer and Charlotte Pisciotta are two people that I've worked with on and off for years. They just bring great content. Then I've really been excited with the information that I find off of with Sprout Marketing with Barbara Savona, she's just is such a spark on any given day to give great information. Then Megan Orser is also ... She has a company called Smart Chick Business, I think. It's a social marketing media, and that's another real fun person to talk with.
Nick Latz: Excellent. Appreciate those suggestions. This was a great discussion, Lori. We really appreciate you joining us. One thing we'll do is we will link a couple of your articles to the show notes and Property Management Minutes to the show notes and the specific blog posts that we mentioned today, so that our listeners can see that. Thank so much for joining us and spending time with us today.
Lori Hammond: It's been fun. It was nice to meet you.