Property: 220 units, Phoenix, Class B+ The PM sent the Q3 renewal report: 64% renewal rate. My first thought: "Solid. Benchmark is 60-65%. We're good." Then we got on an LP call three months later. NOI was $23K behind budget. Occupancy hit target. Renewals hit target. But the P&L was bleeding. So we went back and segmented the 64%. Here's what we found: ――――――――――――――――――――――――――――― QUALITY GAP: • Top quartile residents (paying $1,300+): 51% renewal • Bottom quartile residents (paying <$1,050): 78% renewal We were retaining for occupancy, not revenue. Keeping cheap residents, losing expensive ones. Cost: $84K/year ――――――――――――――――――――――――――――― MIX GAP: • 1BR units: 71% renewal • 3BR units: 47% renewal 53% of our highest-NOI units churned. Meanwhile, our lowest-margin units had the best retention. Backwards. Cost: $370K annually at risk ――――――――――――――――――――――――――――― STABILITY GAP: • 12-month renewals: 41% • 6-month + MTM: 23% Nearly a quarter of our "renewals" were short-term. Not stable retention — just delayed churn. They'd hit us again in 90-180 days. Cost: $113K/year ――――――――――――――――――――――――――――― Total: $180K-$220K leaking on one property. The headline 64% looked fine. But it was hiding three separate crises. We fixed the pricing strategy: • Top-quartile renewals: market or in-place +3%, whichever is LOWER • Bottom-quartile renewals: in-place +4-5% • High-tier units (3BR): 2-3% increases only • No more MTM renewals unless documented move-out date Six months later: • Top quartile retention: up 9 points • 3BR retention: up 12 points • True 12-month stable retention: 58% (up from 41%) Revenue per occupied unit: up $41/month across the portfolio. ――――――――――――――――――――――――――――― The lesson: Don't just track the headline renewal rate. Segment it. Quality. Mix. Stability. That's where the gaps hide. ――――――――――――――――――――――――――――― For anyone who wants the full breakdown: I wrote up the complete forensic analysis with the math, benchmarks, and a 1-page worksheet you can use to segment your own renewal data.

When rent growth stalls, the reflex is to start cutting expenses. I think that's backwards. Expenses are finite. You can only cut so far before you're cutting into the asset. Revenue leaks are different. They're usually just execution gaps: money the lease already entitles you to that nobody is actually collecting. I recently went through three properties (40, 72 and 200 units) line by line. Same pattern every time. Here's what turned up. 1. Flat rents on long-tenure residents → $27K/year The 40-unit had 16 legacy units averaging $957 against a proven ceiling of $1,099. One resident had been there 13.8 years at $900. I'm not going to chase full market on someone that sticky. But zero escalation for a decade isn't loyalty pricing. It's a compounding leak. A modest $50/year bump started three years ago would already have banked $450 and would keep compounding. The rule I use now: every renewal gets something. Under 3 years, market or in-place +3-5%, whichever is higher. Over 5 years, a gentle $25-50 to keep goodwill intact. That's $2-3K per unit over a decade you'd otherwise never see. At a 5.75% exit cap, $27K of permanently impaired NOI is roughly $469K of equity gone. Worth the slightly awkward conversation. 2. Lease expirations stacked in waves → $18-30K/year The 72-unit was running 53% true retention against a 65-80% Class C benchmark. Almost half the departures were controllable: evictions, skips, people leaving over a rent increase. Not the market. Worse, 21 units expired in September. That's 29% of the building in one month. When that happens you can't pre-lease, you can't be selective, and you sign whatever walks through the door. What fixed it: renewal outreach at 75 days instead of 30-45, and 13-15 month terms on new leases to push expirations toward summer and flatten the curve. Now I look at the expiration calendar 90 days out. Anything over 15% in a single month gets staggered before it becomes a cliff. Every avoidable move-out runs about $5,500 (a month vacant, plus turn, plus leasing commission). Twelve of those a year adds up.

Hey everyone, Darshit here. Who I am — I run Orizon Asset Management. I do independent asset management oversight for multifamily: the financial and operational read that sits between your property manager and your LPs. Your PM reports tell you what each report says. My job is to tell you what they say together, and where NOI is leaking. What I'm here for — I want to learn how people are underwriting and operating right now, especially on first and second deals. And if it's useful to anyone: send me a T-12 and rent roll and I'll read it and tell you what I see. Glad to be here. Darshit orizonasset.com

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