{"id":143887,"date":"2022-07-21T13:03:42","date_gmt":"2022-07-21T19:03:42","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=143887"},"modified":"2023-08-07T16:06:04","modified_gmt":"2023-08-07T22:06:04","slug":"prevent-tenant-turnover","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/prevent-tenant-turnover","title":{"rendered":"The #1 Thing You Should Do to Avoid High Tenant Turnover Costs"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC8172079261&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">There are a lot of methods you might know to be obvious when trying to avoid high turnover costs with a rental property, such as proper <a href=\"https:\/\/www.biggerpockets.com\/blog\/questions-to-ask-tenants-before-renting\" target=\"_blank\" data-type=\"post\" data-id=\"143618\" rel=\"noreferrer noopener\">tenant screenings<\/a> and conducting regular inspections.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But there\u2019s one thing, in particular, that could be the difference between having to give your tenant their <a href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-security-deposits\" target=\"_blank\" rel=\"noreferrer noopener\">security deposit<\/a> back or not. It can also determine whether you can take your tenant to court to recoup the turnover costs due to damage or neglect.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And that one thing likely isn\u2019t the first thing that pops into your head when you think about ways to avoid turnover costs.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The move-in inspection.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Feels anti-climactic? Hear me out.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Yes, a move-in inspection is a standard to-do item when renting a property to new tenants. But how much thought and effort do you put into your move-in inspections? I would guarantee you\u2019re doing the move-in inspection wrong, and it\u2019s possibly costing you thousands at your next turnover.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you think I\u2019m being dramatic about a wrongly conducted move-in inspection costing you thousands of dollars, allow me to tell you the unfortunate story of how I know this to be true.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Real-Life Consequences of a Poor Move-In Inspection<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Most of my rental properties are out-of-state, and because of their distance from me, I have property managers who handle them on my behalf. Property managers are a unique breed, and in my experience, it\u2019s fairly standard for a good property manager to, at some point, become not-so-good, and I end up having to fire them and hire a new one.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">A few years ago, sure enough, my favorite property manager turned terrible, and I had to hire a new one. Shortly after the new property manager took over my properties, a tenant in one of the properties stopped paying rent and moved out. After the tenant moved out, the property manager went to the property to initiate the turnover so we could get it rented back out as quickly as possible.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Before the property manager even walked into the property, she knew we had a problem. The tenant had left most of her belongings in the front yard. Based on this, one could only imagine what would be behind the front door.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Sure enough, there were big scuffs on the walls, parts of carpet were torn up, broken kitchen appliances, missing light covers, and the house was just in a generally less than pleasant condition. It could\u2019ve been in worse condition, but there was enough damage to trigger a high turnover expense that was coming my way.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Naturally, the property manager and I agreed to withhold her security deposit refund. Additionally, we were preparing to file a judgment against her for the additional expenses.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But we were stopped dead in our tracks. The tenant responded to the letter about her security deposit being withheld by saying, \u201cAll of those things were like that when I moved in.\u201d A simple response, but a powerful one. Because if that were actually true, we wouldn\u2019t be able to withhold her security deposit, and we certainly couldn\u2019t take her to court for damage expenses.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I knew she was lying because the property was in fantastic condition when she moved in, so right away, I went looking through my files for the move-in inspection report from when she had moved in. Because I had switched property managers during her tenancy, the new property manager didn\u2019t have this information immediately on file. I was nervous looking for the report because I knew it would be my only hope of being able to pursue her for the expenses I was now incurring.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I held my breath until, all of a sudden, I found the inspection report. I saw the file name jump out at me on my computer, and I sighed a breath of relief. I opened the document, feeling confident we could now prove the tenant was lying.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">My breathing paused again, however, as I looked at the document. All I saw was a bare-bones checklist of rooms\u2014only a single checkmark for an entire room if it was in \u201csatisfactory\u201d condition\u2014and three of the world\u2019s smallest and blurriest pictures that had ever been taken since the advent of the camera.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Uh oh.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Sure enough, we had no usable proof the tenant was lying. We could\u2019ve continued to fight her on the security deposit refund, but we knew if she took us to court over it, we couldn\u2019t prove that she was, in fact, lying. We ended up only being able to charge her the $250 for the trash in the yard, and we had to reimburse her the rest.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I lost big time. All because I didn\u2019t have a proper move-in inspection report that would\u2019ve proved she was lying and allowed us to withhold her security deposit and go forward on filing the judgment against her.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you\u2019re wondering, that turnover cost me over $14,000 in repairs, and the tenant got off scot-free.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Rights and Wrongs of Move-In Inspections<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Obviously, the biggest mistake rental property investors make with move-in inspections is if they don\u2019t do one.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But what about when you\u2019re responsible enough to do the move-in inspection\u2014is there a right way and a wrong way to do it?<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">What 99% of investors do during a move-inspection is document and take pictures of what\u2019s flawed or damaged in the property.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This is the wrong version of how to do a move-in inspection.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">When current flaws or damages are documented when a tenant moves into a rental property, the only person that helps to protect is the tenant. Later, when the tenant moves out, the owner can\u2019t charge the tenant for those flaws or damages because there\u2019s proof that those issues existed at the time the tenant moved into the property.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">What an owner of a rental property needs to be concerned with, instead of what is already flawed or damaged, is what is in flawless condition at the time the tenant moves in. Meaning, the documentation needs to be more focused on what\u2019s right with the property rather than what\u2019s wrong with the property. Of course, what\u2019s wrong with the property can still be documented, but that documentation only protects the tenant from undue charges; it does nothing to protect the owner from expenses due to issues caused by the tenant.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The best way to conduct a move-in inspection is to include detailed information on the full condition of the property, emphasizing what\u2019s in good or flawless condition at the time of move-in.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Textual documentation is helpful and should be included, but the powerhouse of a move-in inspection is photographs of everything in good condition. While textual descriptions can be contested, photos can\u2019t be disputed as easily, if at all.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">To have the most rock-solid move-in inspection report that will offer the greatest chance of fighting undue expenses caused by tenant damage to a rental property, consider the following:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">While documenting what\u2019s right and wrong with the property\u2019s condition, the primary focus should be on what\u2019s right with the property rather than what\u2019s wrong with it.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Photographs should be the primary form of documentation rather than textual descriptions.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Take pictures of absolutely everything you can, focusing on what\u2019s right with the property more than what\u2019s wrong with it.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Best Protections Against High Turnover Costs<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Obviously, the move-in inspection is one of the critical efforts to help prevent high turnover costs, if not the most critical. Additional efforts you can consider to help minimize turnover expenses between tenants include:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Thorough and strict tenant screening<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Regular property inspections during all tenancies<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Installation of heartier materials that tenants can\u2019t as easily destroy<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">There is no 100% protection guarantee against high turnover costs due to tenant neglect, no matter how much effort you put forward. 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