When you talk about cost-effective strategies for property managers and owners, tenant retention should be at the top of your list. If you keep your tenants happy, you'll keep receiving those uninterrupted rent checks in the mail (avoiding the time and expense of turnover). Today, we'll summarize the RentJuice whitepaper that details the ins and outs of tenant retention. You can download the full whitepaper for free from the rental experts at RentJuice.

What's the Big Deal

Tenant retention can improve your business by:

• Saving time and money. Each occupied unit means a regular stream of rent payments to your account, as well as less money and time spent on marketing and turnover maintenance.
• Increasing profit. According to RentJuice, "The Journal of Property Management revealed that on average, a retained resident is worth almost $900 each year on top of rent payments. Each time a resident moves out, a unit is vacant for an average of 1.5 months. If the tenant retains their lease, the property saves $1,350 as well as the additional costs that would go to marketing the vacancy."

LTV and CAC

Let's define two of the most important terms related to the economics of tenant retention – LTV and CAC. Then, we'll look at what they mean when combined.

• LTV: Lifetime Value of a Tenant. The LTV is the profit you'll make over the course of the entire time a tenant will be renting with you. The most important thing to understand about LTV is that it increases with each month a tenant stays with you.
  

• CAC: Cost to Acquire a Customer. The CAC is the amount you will spend in order to get one new customer. Why is this number important? Because it will help you determine how you spend your marketing dollars. As RentJuice explains it, "The CAC should always be less than the tenant's Lifetime Value (LTV), and you always want the CAC to be decreasing - this means more profit for you!"
• Why do I care about LTV and CAC? The ratio of LTV to CAC tells you how well you're budgeting your income.
  

The Cost of Vacancies and Resident Churn

Both vacancies and tenant turnover can be extremely expensive!

This chart from RentJuice summarizes the cost breakdown of tenant turnover:

Create a Tenant Retention Plan

Obviously, some tenant turnover is inevitable (for reasons like a new job, finding a lower-priced rental, death, etc.). But most (68%, according to RentJuice) is preventable because it's due to poor customer service. You can minimize this turnover by creating a plan for retention. You'll want to include things such as:

1. Keep the lines of communication open. More than just checking-in with them regularly, you can keep tenants engaged with newsletters and events.
2. Test-out promotions and discounts. Consider things like free last month's rent and renewal bonuses.
3. Use a CRM to help you organize tenant contact info and automate marketing efforts.
4. Adapt to feedback. You can survey your tenants to see what they're happy (or unhappy) about. If you get negative feedback, adapt to it. This shows your goodwill toward the tenant that provided the feedback and will help keep other tenants happy.

These are just a few of the tips from the RentJuice whitepaper. For full details, download the free whitepaper at RentJuice.com.

About RentJuice

RentJuice is a rental marketing platform. It provides brokers and property managers with the tools they need to find tenants and sign them to leases as quickly as possible. The company is growing by leaps in bounds – announcing recently that they have hit over a million listings and officially launched in San Francisco.

To learn more, you can visit RentJuice.com.