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Posted over 9 years ago

07.26.14 Analyzing Tenant Turnover

Normal 1406389773 Turnover

I took Josh Dorkin’s advice and dug into my treasure trove of market research data.

For over 4 years, I’ve been documenting rentals available through Craigslist and the local paper in my target neighborhood. I grab several data points, but relevant to today’s post are address, bedroom count, date, and property manager.

I discovered that Bruce and I are averaging 12.5 months for tenancy between turnovers, that property managers in the area are averaging 16 months, and other private landlords or informal managers are averaging almost 20 months. Looks like we have some opportunity to stretch out our average, but that a two year + stay is not the norm in our neighborhood.

Although, our properties range from 10 months to 15 months averages, so maybe the property drives the turnover as much as the management of it.

All three groups had units that were only rented for one month and units that have been rented for all 50 months. Since 4 bedrooms properties are hard to come by in this neighborhood, not a big surprise that they stay occupied the longest. It was a little surprising that 3 bedroom properties have the lowest average; I would have expected one bedroom dwellers to be more transient.

I learned that there are four property management companies with a big presence in my area, and another 11 that are dabbling in the neighborhood. The big players are averaging 13, 14, 26, and 18 months, so they clearly don’t possess a clear advantage in retaining tenants longer.

So how do we stretch our tenancies another seven or more months? I think one key is in the tenant screening. The longer we do this the better we get at not only spotting the tenants who can’t or won’t maintain an address for long, but also better at spotting pickiness or drama that might cause a tenant to leave rather than accept the shortfalls of the low income area. I think another key is how willing we are to keep current tenants happy. When we have a “not horrid but not great” tenant, we have a tendency to get fatigued trying to keep them happy and get a mindset that if they leave maybe we can find better. As I like to post on the forums, it is always cheaper to retain current tenants, even if they aren't what we had hoped for.  I need to practice what I preach a bit more consistently.

One of my 2014 goals was to be more proactive to reduce move outs or at least expensive move outs. Think we need to get more committed to reducing move outs and reach for a two year average!



Comments (24)

  1. @Michele Fischer  I will get that list to you soon.  Did you listen to 83 in there Marcia said she puts strives for clean, safe, affordable housing.  She said she thought that she could not promise safe, but she could strive for it.  I asked my lawyer if clean and safe might put in some extra liability.  He said it might so I am going to some how incorporate the word strive.


    1. Strive is a very good word, @Lee Richter .


  2. I'm new to BP, but @Michele Fischer see the blog I just posted . . . it wasn't in response to your post (I hadn't seen it), but I think we're on the same path.  Rob.


  3. @Michele Fischer  Thank you for the advice on out buildings.  I just got back from vacation Friday the 15th.  While away I read your book "Collecting Rent" it was real helpful.  Today I tried to copy some of the forms in the appendix and could not.  Is there a place in BP where you have up loaded them, or do you have an internet sight that I might get some of the forms.  If not could I get you to email the ones that I need.

    Thank you Lee


    1. Lee, glad you enjoyed the book!  Send me a list of forms you'd like at [email protected] and I'd be happy to send them to you.  For now that is my high tech solution.  :)


  4. @Lee Richter , I had to chuckle when I read your post.  I didn't talk about it in the podcast, to my mothers disappointment, but our motto is clean and safe.  Whenever we are thinking about spending extra money, we run it through the filter of clean and safe.  It's a great motto and a great guide.  Sheds are highly functional, but monitor your outbuildings closely for marijuana grows and unauthorized occupants.


  5. Back to the original challenge that Michele took on. It reminds me of an old saying applicable to any business:

    "If you are not measuring is, you can not manage it"

    It may be trite but there is a lot of truth in it as well.

    There is a big difference between going by "gut" or "feel" and actually analyzing trends. Having said that, it is only a first step to seeing where and what issues need to be addressed. There may or may not be an obvious   solutions but it certainly will help you focus on where your energy should be spent for the most benefit.


    1. Well said Oren, thanks for weighing in!


      1. I really enjoyed your podcast.  I am just getting into Mobile Homes.  I am fixing up my first one.  My am working out my strategy on how to get long term tenants.  So far I am going to put in an alarm system, advertise Nice, Clean, & Safe.  Clean & Safe are going to be the main words.  I am also going to put a 10' by 15or20' shed on the property.  I am putting up a fence so that kids can be kept in the yard safely.  I will let everyone know how this works.  


  6. I'd just like to add that sec. 8 provided a solid, six-year tenant for me as well.  I thought the rules and inspections were a bit nit-picky, but overall a good deal.


    1. Stephanie and Jeff S, I love the idea of section 8, but have a few obstacles. First, my husband is a housing commissioner, so it would be a conflict of interest for us to participate. Second, most people with vouchers want to live in a nicer neighborhood than where our properties are (we have only turned down 3 or so vouchers). Many areas are experiencing hardships as funding shrinks. In our area the wait list has been closed for over a year, there is no hope for those awaiting vouchers, reducing the number of section 8 applicants circulating. If it weren't for all that, I'd do it in a heartbeat! We work with other non-profits when we can, but the programs cater to less stable people in need of housing.

  7. If the local economy is the cause of having unstable tenants then it is a tough deal. Have taken less than stellar people when places won't rent and vacancies are a problem.

    You have a viable business there and I believe there will always be a need for lower cost housing. If you can minimize the wear and tear on yourselves then it is all good. I'd like to see you capitalize on section 8; many are doing well utilizing that resource and you are comfortable with the less fortunate. I had a sec 8 for 13 years and it was a pain free income. The lady raised 3 rambunctious boys there. It was a good cause.


  8. Michelle, just curious where you are with the pricing. I've always felt that if tenants can look around and find a better deal they will leave. I know your properties are relatively new purchases so hard to have very low rents but what is the cost to refurbish a unit?

    My average tenancy is 7 years which might indicate low rents but I think since I require excellent credit they are stable people who deserve a good price. When someone does move after this many years the place really needs to be gone through so I make them nice.

    If rents are set to a certain metric then my rent increases (with a great tenant) reflect only my increased expenses which the tenants have no problem with.

    I am at the opposite end of the rental style and properties that you are but have always worked a J.O.B. (not now) and only wanted low hassles.


    1. Hi, @Jeff S. !  I know we've discussed market rents before.  We have tried charging a bit below market and it has backfired.  Charging a little above actually seems to be working a little better for us.  In theory both approaches should give us better applicants to choose from, but we find that if the financial/rental history is stable than they have other drama issues, or they would live elsewhere.  I can only think of two tenants who left to get a cheaper place; most can't scrape together the deposits to move.  We've had 10 applicants move out because they lost their job or income source, 5 because of another changed circumstances (lost a roommate and couldn't find a new one, bought a house, had to be closer to a hospital), and only 3 that we think that we could have potentially influenced to stay.  Those are ugly numbers, and suppose that means focusing on tenant screening and hoping/influencing the improvement of our local economy.


  9. Michele:

    I am most interested on where this exercise takes you.   We have started similar data collection and mining and have learned a couple things:

    1) Our properties "Universityville" are averaging turnovers every 12.75.  Watching the other properties on our blocks, we see the same behaviour - students seem to move annually, regardless of whether they have a "good deal" or not.

    2) Tenancy in our buildings, outside of Universityville, in the downtown core are averaging 22 months.  The contributing factor of our client population here has been the percentage of young professionals / couples, who rent from us as a stepping stone to purchasing their own home.


    1. Always love your comments, @Roy N. 

      Sometimes our client population limits us on what we can do to change the metric, but we should keep trying and it may involve some creative thinking, and in our case being even more hand-on.

      Not sure if this will have much impact, but this week I did order birthday cards (plan to add some Wendy's bucks) and Christmas cards (plan to add Papa Murphy's gift cards) from VistaPrints to send to tenants, and went through applications to gather the birthdays.  Relatively inexpensive way to show we care.


  10. A lot of investors look at marketing data, but I think very few (including me to one degree) look at tenancy data. It gets lost in the shuffle, but it is extremely important as you mention.


    1. Thanks, Andrew! Agree its easy to gloss over this stat, since it takes more time to compute. My gut feel for an average wasn't too far off reality, good or bad.

      1. Have you looked into Jeffrey Taylor's stuff (Mr. Landlord) at all by chance? He's one of the few investors who really makes property management a priority. I like a lot of what he talks about but haven't had a chance to implement much of it.


    2. Andrew, I have examined Mr Landlord, I wrote an earlier post/book review on 6/12. I don't like his style at all, it feels really insincere, but did pick up a few things to incorporate.

  11. This is really a great way to keep your data driving your business! Good job @Michele Fischer !


    1. Good point, thanks Ronald!

  12. Hey @Michele Fischer - I'm glad that you took me up on the challenge . . . now you have the data you need to know that you have some work to do to get longer tenancies.  I'm looking forward to hearing from you as you work through it.  Great stuff as always.


    1. Thanks @Joshua Dorkin !  We think we've made strides resolving and retaining one tenant with drama this month, but are struggling to coddle the tenant who won't sleep in her unit because she found a large spider in her garage.  Oy!