{"id":48225,"date":"2013-09-23T11:19:02","date_gmt":"2013-09-23T17:19:02","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=48225"},"modified":"2021-03-16T10:11:12","modified_gmt":"2021-03-16T16:11:12","slug":"2013-09-23-cashflow-killer","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2013-09-23-cashflow-killer","title":{"rendered":"Tenant Turnover: The Biggest Killer of Your Rental Cash Flow"},"content":{"rendered":"<p><a title=\"How to be an Awesome and Profitable Landlord\" href=\"https:\/\/www.biggerpockets.com\/blog\/2013\/09\/19\/bp-podcast-how-awesome-landlord-with-kevin-perk\/\" target=\"_blank\" rel=\"noopener\">I have said it before<\/a> and I will say it again, positive cash flow is king in the landlording business.\u00a0 My goal as a buy and hold investor is to try and maximize my cash flow.\u00a0 Over the years I have learned that there is one item that kills cash flow more than any other:<\/p>\n<h3>Tenant Turnover<\/h3>\n<p>When talking about tenant turnover killing cashflow, I am talking about all of the processes and costs involved in moving a tenant out of an apartment, fixing it up and moving another tenant in it.\u00a0 These processes and costs include:<\/p>\n<ul>\n<li><strong>Administrative costs<\/strong> \u2013 The time and effort it takes to process tenants out and process new ones in.<\/li>\n<li><strong>Advertising costs<\/strong> \u2013 Depending on your market, you may need to run print and web based classified ads, put up signs, hold open houses, etc.<\/li>\n<li><strong>Showing Costs<\/strong> \u2013 Someone generally has to field the phone calls, set showing appointments, drive to the property and show it to potential tenants.<\/li>\n<li><strong>Application costs<\/strong> \u2013 You have to run credit and criminal background checks, verify work and income information and process the application.<\/li>\n<li><strong>Repair costs<\/strong> \u2013 Could be a biggie.\u00a0 Ideally you would be able to immediately re-rent the unit.\u00a0 But that rarely happens.\u00a0 There is always some amount of repair costs.<\/li>\n<li><strong>Lost income costs<\/strong> \u2013 Of course when your apartment is vacant, it is not generating any cashflow at all, much less a positive cashflow!<\/li>\n<\/ul>\n<h2>Avoiding Tenant Turnover<\/h2>\n<p>All of these costs can add up quickly.\u00a0 So what can you do to keep tenant turnover as low as possible?<\/p>\n<ol>\n<li><strong>Avoid yearly jumpers<\/strong> \u2013 Some folks, for what ever reason, just like to move around a lot.\u00a0 They will change addresses every year or so and you can see this on their application.\u00a0 If you can, try to avoid these folks.\u00a0 You really want people who will stay long term.<\/li>\n<li><strong>Respond to tenant requests<\/strong> \u2013 Probably the number one complaint of tenants is unresponsiveness of the landlord to their requests, especially repair requests.\u00a0 To keep good tenants long term, you have to be responsive and communicate with them.\u00a0 You have to do your best to fix things.<\/li>\n<li><strong>Maintain your properties<\/strong> \u2013 Very few people are looking to rent from a <a title=\"So you're a Slumlord\" href=\"https:\/\/www.biggerpockets.com\/blog\/2013\/05\/20\/slumlord\/\" target=\"_blank\" rel=\"noopener\">slumlord<\/a>.\u00a0 Keeping your grass cut and the common areas clean are part of the business.\u00a0 Don\u2019t skimp here.<\/li>\n<li><strong>Keep rents well within the market<\/strong> \u2013 Some would say that you need to raise rents every year.\u00a0 I would argue that you may not be making what you think with rent increases if they cause your tenants to move.<\/li>\n<\/ol>\n<p>There is not really much you can do if your tenant is determined to or has to move due to life circumstances.\u00a0 At that point, another whole process comes into play in order to get your property back as close to rent ready condition as possible.\u00a0 But that is a subject for another post.\u00a0 For now, use these tips to keep your turnover as low as possible.<\/p>\n<p><font size=\"-2\">Photo: <a href=\"http:\/\/www.flickr.com\/photos\/31819631@N06\/3483843769\/\" target=\"_blank\" rel=\"noopener\"><pdragon><\/pdragon><\/a><\/font><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I have said it before and I will say it again, positive cash flow is king in the landlording business.\u00a0 My goal as a buy and hold investor is to [&hellip;]<\/p>\n","protected":false},"author":726,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183],"tags":[128,186,190,59,569,4878],"class_list":["post-48225","post","type-post","status-publish","format-standard","hentry","category-landlording","tag-cash-flow","tag-cashflow","tag-landlord","tag-real-estate-investing","tag-tenant","tag-tenant-turnover"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/48225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/726"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=48225"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/48225\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=48225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=48225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=48225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}