What is the Real Cost of Resident Turnover?
By Rob Kirkpatrick
Kirkpatrick Management Company
It is January 1st and you have just received the keys to Mrs. Brown’s unit after being a Member of Green Highlands Cooperative for 15 years. Mrs. Brown paid her carrying charges on time she always parked in her numbered spot and she tried to do her part in making the cooperative a pleasant and safe place to live. She moved out only because she needed more specialized, professional care.
As Resident Manager of Green Highlands, it brings to mind the age-old question: How much does it really cost to turn a unit over? Just to prepare the apartment for the new Member, the unit needs to be repainted, cleaned and maintenance needs to be completed. But, is that all?
Too often we only consider the “hard” or obvious costs associated with completing the make-ready. There are many hidden costs you need to be aware of when you lose a resident. Have you considered the following costs?
The cost and time of a manager walking the unit after it has been vacated and
before it is reoccupied.
The cost of on-going marketing such as For Rent magazine, brochures, news paper ads, commissions, banners and yard signs.
Rent loss on a unit is an area where the costs can go out of sight. Each and every day a unit is vacant, the income is lost forever.
What about those extra tough units that require a lot more than just routine
Processing the paperwork on the move-out in terms of man-hours and computer
time can be expensive.
Simply stated: Every move-out requires more work for everyone, the leasing office, the maintenance staff, and the main office. The chart below summarizes these costs and puts a sharper light on the need to Retain your Members whenever possible’
Cost of a Unit Turnover
Make Ready Cost Estimate
Walk & Trash Unit $ 50
Maintenance — Labor $ 100
Parts & Supplies $ 350
Carpet Replacement $ 850
Paint & Labor $ 450
Cleaning $ 150
Marketing & Advertising Cost Estimate (prorated)
Advertising $ 75
Curb Appeal, signs, banners, etc $ 100
Vacancy Loss (1 month) $ 450
TOTAL TURNOVER COST: $2,575
As you can see, the cost of losing a resident can add up quickly. If it’s not your cooperative’s business strategy already, Resident Retention should be your Number 1 goal in 2003 and beyond. Today, cooperatives across the country are experiencing higher than normal vacancy rates and with significant increases in fuel, insurance and property taxes, the need is more acute than ever to keep our residents happy through superior service. We must actively compete in the real world, and it is essential that we (the on-site staff, the Board and management) understand what the true cost is to lose a Member. This helps us better control our costs.
Volume 1, Issue 1