Peter Lohmann's Newsletter - Issue #132

Huge update on Churn at my Property Management Company; Enter to Win $7.7k Treasure

Author

Peter Lohmann
March 07, 2025

A no-fluff weekly publication for the property management industry.

The Deepest Churn Analysis Ever Completed by a Property Management Company

I’m obsessed with fixing our company’s client churn.

Put a simpler way: Why do our clients leave? Which clients are leaving? Are they leaving more or less than they used to?

Many issues of this newsletter have reported on my experience battling churn at RL Property Management, notably issues #38 Link, #57 Link, #63 Link, and #74 Link.

Today I have another update, and some brand new analysis. Let’s start with how things look right now, using my new favorite way to visualize churn:

Client Churn at RL Property Management, Trailing 2 Years

This chart shows our client churn on a rolling 3-month average basis, going back 2 full years. You can see we peaked at 3.3% monthly churn (~40% annual, wow) back in October of last year.

Since then, we’ve been steadily dropping, and last month finished at a 1.4% rolling average… sweet. That’s only ~17% annual churn, which I’d be very happy with if we can maintain throughout 2025.

Of course, the first question everyone wants to know is: What went wrong that caused churn to climb so high, and what did you do starting in October that fixed it? I put this question to the entire leadership team during our weekly Level-10 Meeting.

I used Plaud to record, transcribe and summarize the discussion. Here’s the AI summary:

The main causes of client churn identified include:

1. Seasonality and Rapid Growth: There was a mention of seasonality trends and rapid growth that led to bandwidth issues, causing things to suffer across the company.

2. Misalignment of Client Expectations: There were frustrations about onboarding clients who were not a good fit, leading to a decline in client satisfaction.

3. Dissatisfaction with Maintenance and Pricing: Issues in the maintenance department, including wrong personnel and poor service quality, contributed to client dissatisfaction.

4. Economic Factors: The economy and market conditions were also mentioned as contributing factors.

5. Communication Issues: Lack of communication and trust within departments, as well as with clients, was highlighted as a significant issue.

6. Wrong Personnel in Key Roles: There were references to having the wrong people in key positions, which affected service quality and client satisfaction.

7. High Turn Costs and Inefficient Processes: High turn costs and inefficient processes in client onboarding and maintenance were also noted as contributing to churn.

Churn improved starting in October due to several factors:

1. Improved Communication and Customer Service: There was an emphasis on enhancing client communication and customer service across the company, which likely contributed to better client relationships and satisfaction.

2. Refocusing on Client Experience: The company refocused its efforts on ensuring clients were a good fit and improving the overall client experience, which helped in reducing churn.

3. Addressing Maintenance Department Issues: Improvements in the maintenance department, such as placing the right people in roles and enhancing service quality, played a role in reducing client dissatisfaction.

4. Company Culture and Communication Improvements: Positive changes in company culture and communication were noted to have a beneficial impact on client retention.

-Plaud AI Summary of RL Churn Discussion

Prior to me discovering this way of looking at churn (shoutout to Jordan Muela for helping me a lot here), we were just looking at year-to-date data and comparing it with churn from last year. It was something, but it really did not paint the picture that we needed to fully grasp what was going on with churn and if it was trending up or down.

Alright, but that’s not all…

Look at this:

Churned Client Lifecycle Analysis at RL Property Management

Here we’re visualizing all churned clients, by lifetime up to 36 months, in the 12-year history of RL. In other words, for clients who churned in the first 3 years, when did they churn?

As you can see on my notes, the two riskiest points in a client’s tenure with our company, by far, are right at the start (high turn cost, or long leasing time) and then again during their first vacancy. That makes sense. If we can get through those two events without losing them, they are likely to stick around for a long long time.

The power of this insight means that as a PM company, we can focus our efforts on clients who are within those two windows, knowing they are at-risk during that time. For clients who are not within those windows, we can take a more relaxed approach, freeing up resources for where they are needed most.

Finally, let’s do the mother of all churn visualizations—a cohort analysis:

RL Property Management Client Churn Cohort Analysis, by Month

This is basically the prior graph, but sliced up by “cohort”, in this case the month that the client started with RL. If you look at the top row, we had 9 clients sign on with us in May of 2024, and by February (9 months later), we still had 89% of those clients. Great!

Contrast that with the cohort of 9 clients that signed on with us in December—2 months later, only 67% of them are still with the company! Something changed… either we started onboarding bad-fit clients, or we dropped the ball on turns or leasing, or something else.

By the way, I need to interrupt this discussion with a plea to everyone reading this who sells into our industry: Please add churn data & visualizations like this to your products. I’m talking to you, Buildium, Rentvine, Appfolio, LeadSimple, Aptly, Profit Coach, Blanket, Lineage, Property Meld and everyone else who has access to our client data. I had to hack all this together with the ugliest spreadsheets you’ve ever seen in your life, and it was completely manual. OK, back to the analysis.

So by using this type of visualization, it helps you see understand if changes you’re making at your company are actually impacting churn. For example, we could decide to require all new clients in March to have a face-to-face meeting with a property manager before we allowed them to sign up. After just 3 or 4 months, we’d have a great, visual way to understand if those clients were more or less likely to churn (by comparing it to the cohorts from January and February).

By the way—exactly NONE of the clients onboarded since May of 2024 churned out beyond month 4. If we can get them past month 4, we’re golden, as previously discussed.

Alright that’s all I’ve got for churn. Hopefully some of you found this helpful as you tackle churn at your own PM company! -Peter

THIS ISSUE IS PRESENTED BY PROPERTY MELD

What if three days could transform your maintenance operations?

The 2025 MX Summit is happening September 16-18 in Rapid City, SD—and the agenda is officially live!

Customer-Obsessed: How prioritizing residents drives better operations.

From Resistance to Buy-In: Get your team on board with change.

Embracing Maintenance AI: Future-proof your maintenance strategy.

“It rejuvenates you and gives you ideas you can take back and implement.” – United Properties of West Michigan

This isn’t just another conference—it’s your playbook for boosting efficiency, increasing NOI, and making maintenance a competitive advantage.

Leave with real strategies to drive impactful change in your maintenance process.

[From Peter—I’m speaking at this conference! See you there!]

New Property Management Companies For Sale This Week

Generously sponsored by Live Oak Bank’s property management lending team! Join their NARPM webinar on 3/13/25: Financing Your Growth: SBA Loans & Creative Deal Structuring. Register Now! 

  • Here is a property management company for sale in Orange County, FL (asking $1.7M, 80 short-term and 60 long-term rentals)

  • Here is a property management company for sale in Mahoning County, OH (asking $1.1M)

  • Here is a STR management company for sale in Granby, CO (asking $450k, 25 properties).

  • Here is a home concierge business for sale in Maricopa County, AZ (asking 455k, 100 clients).

  • Here is a commercial management company for sale in Houston, TX (asking $1.3M)

Industry News & Events

  • PetScreening closes $80M Series B round.

  • VC-Backed PM company Nomad has raised additional cash (amount not disclosed). They had previously raised a total of 24M and occupy #9 on my list of VC-backed PM companies.

  • Belong, #2 on that same list, is suing its insurers “over their refusal to pay legal defense costs in an underlying false-advertising case.” Belong has raised an eye-watering 138M in capital. How many units are they managing, I wonder?

  • ONLY 28 DAYS UNTIL CRANE APPLCATIONS RE-OPEN. GET ON THE WAITING LIST TO BE NOTIFIED FIRST! What is Crane? More here.

  • Property management leaders DD Lee, Stacey Salyer, and Drea Buer are hosting a Women’s Mastermind later this month, right before Broker/Owner. If you manage under 150 doors and would like to attend this but it's not in the budget for your business, message me and I’ll hook you up.

  • Speaking of Broker/Owner, it’s not too late to grab your ticket to NARPM’s best annual conference. I’m on a couple panels and will be there all week. Say hi!

  • Second Nature’s treasure pot is up to $7.7k—why not enter?

Closing Thought

~ ~ ~

P.S. Did someone forward you this email?

Stats from last week’s issue:

Valid Recipients: 15,155

Open Rate: 67.2%

Clickthrough Rate: 3.0%

Most Popular Link (60 clicks): Asset Management Deep Dive with Mark Brower

The content of this newsletter is for informational purposes only and does not constitute professional advice. I may have consulting agreements with, or financial interests in, companies mentioned in this newsletter. Additionally, some of the links included in this newsletter are affiliate links, meaning I may earn a commission if you make a purchase through these links. Always perform your own due diligence before making any financial or business decisions.