Hot Take: Almost no one gives a sh*t about turnover in multifamily.
Not really.
We're so focused on renewal rates on a per month basis.
I'm going to call renewal rates what it is, a FEEL GOOD KPI.
If renewal rates are high, we pat ourselves on the back.
If they're low, there were reasons beyond our control.
Aren't turnover and renewal rates the same thing inverted? No it is not.
If a resident renews, there’s nothing more to do right? Easy metric that requires no further action.
$136,638 𝐑𝐄𝐅𝐑𝐀𝐌𝐄 𝐨𝐟 𝐓𝐫𝐚𝐜𝐤𝐢𝐧𝐠 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐯𝐬. 𝐑𝐞𝐧𝐞𝐰𝐚𝐥 𝐑𝐚𝐭𝐞𝐬
Turnover and the metrics that roll up to it are actionable.
Turnover is the #1 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 𝐋𝐨𝐬𝐬 & 𝐂𝐨𝐬𝐭 𝐃𝐫𝐢𝐯𝐞𝐫 in multifamily period.
𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐋𝐨𝐬𝐬 & 𝐂𝐨𝐬𝐭 𝐌𝐞𝐭𝐫𝐢𝐜𝐬
→ Avg days vacant between occupants
→ Unpaid balance at move out
→ Vacant utility cost
→ Unit turn expenses
→ CAC - marketing, concessions, screening, applicant software
Check out this break down ⤵️
On a 250 unit property with an average occupancy of 93%
𝑪𝒐𝒏𝒔𝒆𝒓𝒗𝒂𝒕𝒊𝒗𝒆 𝐀𝐬𝐬𝐮𝐦𝐩𝐭𝐢𝐨𝐧 𝐀𝐯𝐞𝐫𝐚𝐠𝐞𝐬:
Rent $1253 (Texas Avg in Oct 24)
Days vacant 39
Unpaid balance at move-out $415
Vacant utility cost $135
Unit turn cost $2075
CAC $856
𝐓𝐎𝐓𝐀𝐋 $5,109/unit ⬅️
Rate of 50% Turnover or 116 units per year
TOTAL annual Turnover Loss & Cost = $592,644
Can you eliminate turnover and it's cost altogether?
Of course not.
But can you reduce turnover and improve the individual metrics that make up turnover loss and cost?
100% 𝐘𝐄𝐒
𝐑𝐞𝐟𝐫𝐚𝐦𝐞 𝐀𝐬𝐬𝐮𝐦𝐩𝐭𝐢𝐨𝐧𝐬:
𝐑𝐄𝐃𝐔𝐂𝐄 ⬇️
Turnover from 50% to 45% = Adds $61,308 in NOI for a 5% improvement!
Days vacant between occupants from 39 to 35 days adds $16,790 in NOI
Avg balance at move out by 25% & adds $10,400 to NOI
Unit turn cost by 20% adds $48,140 to NOI
Sounds small peanuts not worth your time?
Imagine it in 𝘳𝘦𝘷𝘦𝘳𝘴𝘦...no gains...turnover at 55%
OUCH!
There goes 2025 distributions.
