How to Deal with Owner Churn



Welcome back to The Property Management Show. If you joined us on Part 1 of this podcast with Ray Hespen, you learned about why it’s important for property management business owners to pay attention to churn. You need to do more than pay attention – you need to measure it.

We’re back to talk about how you can prevent owners from leaving in the first place.

Measuring Owner Churn

If you’re not measuring your churn, you don’t know how big of a problem it is.

Owners have different goals. Whatever your business goal is, owner churn should be a KPI. It impacts your growth and profit. We cannot think of a single property management strategy that would not need a metric measuring churn.

So, who should measure it?

That depends on how your property management company is structured. Ray says that whoever is responsible for owner engagement after the sale should ultimately track owner churn.

All Churn is Not Created Equal

You need an ideal customer profile. This is something that gets talked about a lot. Who is your perfect client?

Churn from anyone who does not fit that profile is likely okay. Churn from perfect clients is not okay.

It’s important to keep track of who you’re losing and who you’re keeping. You need a scorecard to show you whether you’re losing those perfect clients or others that you took on knowing they weren’t a perfect client. Then, you’ll need to decide how much you’re willing to invest to recover the clients you lose. It may be worth it to recover the perfect clients.

Resident Satisfaction and Owner Churn

In Part 1 of the podcast, we talked about two things that impacted owner churn:

* Maintenance visits to the property (more visits = better retention)

* Staying below the 12 percent maintenance costs threshold

The third thing is resident satisfaction. There’s a direct correlation between lease renewals and owner renewals.

This makes sense and it matches the maintenance indicator. Residents who are not satisfied with maintenance will not stay in a property. When lease churn is higher, owners will reconsider their property management relationship.

Sometimes, property managers worry about providing great service to residents because they don’t want owners to believe that it’s at their expense. That’s crazy. Owners should want you to treat their residents well.

When you retain tenants, owners save money. When a resident leaves a property, here are some of the things that happen:

* The property manager has to do an inspection.

* The property manager has to organize repairs and replacements.

* The property manager has to find a new tenant quickly to avoid a long vacancy.

And all those costs are passed to the owner.

Retaining a resident for five years requires resident satisfaction. It’s worth it to you as a property manager because it helps you keep your owners.

Keeping Churn Low: A Dashboard

If you want to keep your property management company’s churn low, you know you have to measure it first. Then, you have to think about these three specifics. There is probably a way in your accounting software to capture this data.

* Which owners are at risk of being above that 12 percent maintenance cost vs. rental income threshold? Know who they are. Give them the white glove treatment and take good care of them.

* Focus on resident satisfaction. Look at the things you can control and correct any issues quickly. The average rental unit has an average of four service issues a year. Be attentive.