Investors Associated: Employee satisfaction leads to tenant retention
To be successful at owning and managing rental properties, one important concept to pay close attention to is tenant retention. Regardless of the asset class, when a tenant moves out of their rented space it will have an enormous impact on the property’s financial health. There are a variety of reasons for this. For example, there are expenses involved in marketing and leasing the space to a new tenant. Often repairs need to be made in the space after the tenant leaves and there is lost rent while the space sits unoccupied.
Many factors go into a tenant’s decision to renew a lease, some of which are completely out of the owner’s control. One factor that is under the owner’s control but is often overlooked is the services provided by the team running the property. Many property owners do not appreciate the correlation between employee satisfaction and tenant retention.
Turnover for property management teams is higher than other industries — around 30–50%. The nonstop, thankless demands of running a property can cause quick burn out. Property management professionals tend to switch jobs frequently.
To have low employee turnover, property owners need to put forth effort into keeping their employees engaged and making them feel valued. They need to treat their employees as an asset and invest in them as much as they do in their actual real estate assets. Listening to employees’ needs and giving them the tools and the flexibility they need to do their job is vital to employee satisfaction. Employees need to see a path for growth and feel secure that their employer wants to see them succeed.
Even if an owner has enough people working, if they are not happy with their jobs that will also impact the level of service tenants receive. Happy and fulfilled employees are far more likely to be attentive to tenants than unhappy ones. This leads to higher renewal rates.
Companies that can retain their employees have a leg up on the competition because employee happiness has a direct impact on renter retention. Staffing levels play a big role in how tenants feel about where they rent. Picture a property that doesn’t have enough employees. Tenants either wait to be helped or settle for solving their problems themselves. Without team members to ensure seamless experiences are happening, satisfaction levels are bound to sink. Underserved tenants won’t stick around.
Property owners who understand the relationship between employee satisfaction and tenant retention will have built both employee and tenant loyalty. They will be in a better position to survive any type of real estate market that comes around and provide higher returns for their investors. When investing in real estate, it is important to pick a company that values their employees and treats them as important assets.
At Investors Associated, we focus on maintaining our strong team member and tenant relationships. Please contact Jamie Stefan at firstname.lastname@example.org or (414) 797-3947 to talk more about our in-house management.
Rachel Govin is chief operating officer and general counsel for Investors Associated.