Why are renewals frequently incentivized less?
Are We Doing Lease Renewals Backwards?
The leasing paradox: saving more while spending less. Is this just one of those, “Because we’ve always done it that way” practices?
In multifamily, it’s common to see higher bonuses or commissions paid for new leases than for resident renewals. That structure has been around forever.
Yet at the same time, our industry consistently highlights how expensive it is to lose a resident. Often $4,000 to $7,000+ per unit once vacancy loss, turn costs, utilities, marketing, and labor costs are factored in. The math isn’t adding up.
Multiple industry studies show that retaining an existing resident costs five to seven times less than acquiring a new one.
Renewals don’t just prevent turnover costs; they stabilize income, protect cash flow, and reduce operational disruption. A strong renewal outcome often saves more net revenue than a brand-new lease creates. Especially in markets pressured by rising expenses.
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So why are renewals frequently incentivized less? Many companies now include the maintenance or service team on renewal bonuses. Well-deserved and long overdue!
Does this impact the lesser amount paid to leasing? Long before maintenance teams were included in renewal bonuses, leasing typically received a lesser bonus for a renewal. When I questioned this in my early years, I think the reason I was given was “because they already live here”.
Which as we all know, can be much more taxing and time consuming than a new tour. Especially if the resident has continued issues.
Renewal success isn’t passive or administrative. It requires proactive relationship-building, thoughtful communication well before lease expiration, and the ability to reinforce value beyond price. That’s sales skill, not paperwork. When renewals are under-incentivized, we risk signaling that retention matters less than replacement.
Perhaps the real question isn’t whether new leases deserve bonuses, they do! But whether renewal incentives should be recalibrated to match their true financial impact.
In a business driven by NOI preservation, stable occupancy, and long-term resident satisfaction, rewarding retention more aggressively may not cost more and may cost less in the end.
Source: Multifamily Insiders
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