$12,000 Turnover!! Is this normal for less than 3 year tenant.

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$12,000 Turnover!! Is this normal for less than 3 year tenant.

Jasper Zimmerman
Realtor · Cookeville, TN · Member since 2021 · 11 posts · 3 votes

Hello,

I'm a new investor with one unit in Indianapolis, IN. I'm an out of state landlord with a property management company taking care of the house. The tenants recently moved out and the property management company sent a quote from their vendor with the list of repairs totaling $12,000. This is a 3 bed 1 bath house that is 1128 sqft. The repair work consists of drywall repair, painting the whole inside of the house, replacing flooring with LVP in 3/4 of the house, a few other minor repairs.

Is this a normal turnover price tag for a 3 year tenant?

Is my PM company and their vendor gouging me? 

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Jasper Zimmerman:

Hello,

I'm a new investor with one unit in Indianapolis, IN. I'm an out of state landlord with a property management company taking care of the house. The tenants recently moved out and the property management company sent a quote from their vendor with the list of repairs totaling $12,000. This is a 3 bed 1 bath house that is 1128 sqft. The repair work consists of drywall repair, painting the whole inside of the house, replacing flooring with LVP in 3/4 of the house, a few other minor repairs.

Is this a normal turnover price tag for a 3 year tenant?

Is my PM company and their vendor gouging me? 

I'm in a small town with few options. It would cost me around $5,000 for flooring and $2,500 for painting walls. Add drywall repairs and "other minor repairs" and I could see it creeping up to $9,000. But there are many variables involved.

Your title asks, "Is this normal for less than 3 year tenant?" No, it is not normal. Even $3,000 is not normal.

An average Tenant will leave some minor damages and cleaning, costing you 50% of their security deposit or less. Nationally, I suspect fewer than 20% of all renters lose their entire deposit and fewer than 10% will leave enough cleaning and damages to eat up more than their deposit will cover (not counting unpaid rent).

This is not normal, and Tenants don't cause $12,000 in damages in just a few months. This took place over a long period of time. So why didn't your PM catch it and put a stop to it? Do they have proof of inspections over the last three years? At a bare minimum, they should have inspected once a year before offering a renewal. Your tenant renewed twice, so there should have been at least two inspections.

Either I'm missing something important or your PM is actually costing you far more than their management fee.
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  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    4y

    @Jasper Zimmerman

    @Jasper Zimmerman

    If you want an accurate assessment, you should post the scope of work and condition/photos of the property. 

    Does painting the whole inside of the house include all doors, trim, repairing/sanding/priming and painting the walls, paint ceilings, and cabinets? Hopefully you see where I'm going with this. I don't know rehab costs in Indy, but you can always take that scope of work and run it by another contractor and compare the bids.

    12k can be high, low, or just right depending on what exactly needs to be done.

    2Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    4y

    Before getting into price and other issues, does the house need these repairs and why?

    Was there damage caused by the tenant or is the place outdated?

    0Reply
  • Jasper Zimmerman
    OP
    Realtor · Cookeville, TN · Member since 2021 · 11 posts · 3 votes
    4y

    Bob Okenwa Thank you. I added the scope of work to the original post. The painting is trim, doors, and walls, but not the cabinets. I'm getting another bid on the work and will compare those.

    0Reply
  • Kevin Douglas
    Investor · Bend, OR · Member since 2019 · 61 posts · 68 votes
    4y

    I can probably help… feel free to DM me

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Jasper Zimmerman:

    Hello,

    I'm a new investor with one unit in Indianapolis, IN. I'm an out of state landlord with a property management company taking care of the house. The tenants recently moved out and the property management company sent a quote from their vendor with the list of repairs totaling $12,000. This is a 3 bed 1 bath house that is 1128 sqft. The repair work consists of drywall repair, painting the whole inside of the house, replacing flooring with LVP in 3/4 of the house, a few other minor repairs.

    Is this a normal turnover price tag for a 3 year tenant?

    Is my PM company and their vendor gouging me? 

    I'm in a small town with few options. It would cost me around $5,000 for flooring and $2,500 for painting walls. Add drywall repairs and "other minor repairs" and I could see it creeping up to $9,000. But there are many variables involved.

    Your title asks, "Is this normal for less than 3 year tenant?" No, it is not normal. Even $3,000 is not normal.

    An average Tenant will leave some minor damages and cleaning, costing you 50% of their security deposit or less. Nationally, I suspect fewer than 20% of all renters lose their entire deposit and fewer than 10% will leave enough cleaning and damages to eat up more than their deposit will cover (not counting unpaid rent).

    This is not normal, and Tenants don't cause $12,000 in damages in just a few months. This took place over a long period of time. So why didn't your PM catch it and put a stop to it? Do they have proof of inspections over the last three years? At a bare minimum, they should have inspected once a year before offering a renewal. Your tenant renewed twice, so there should have been at least two inspections.

    Either I'm missing something important or your PM is actually costing you far more than their management fee.
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  • Jared Garrison
    Rental Property Investor · Kalamazoo, MI · Member since 2020 · 35 posts · 40 votes
    4y

    @Jasper Zimmerman

    How did the house start out? ie was the flooring already 10-20 years old?...had it been 10 years since the place had been painted?

    They could be gouging you, or it could just be due for some upgrades

    0Reply
  • Jasper Zimmerman
    OP
    Realtor · Cookeville, TN · Member since 2021 · 11 posts · 3 votes
    4y
    Originally posted by @Jared Garrison:

    @Jasper Zimmerman

    How did the house start out? ie was the flooring already 10-20 years old?...had it been 10 years since the place had been painted?

    They could be gouging you, or it could just be due for some upgrades

    I purchased the house in April of 2021 with these tenants in place. The paint is roughly 3 years old and the flooring I'm not sure on the age. I agree it could be due for some upgrades and I'm not disagreeing with the need of replacing the flooring and paint. It is more of the price. The cost of the install for 910 sqft of mid level LVP I have been quoted is $5,400 and paint at $3,000.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y
    Quote from @Jasper Zimmerman:
    Originally posted by @Jared Garrison:

    @Jasper Zimmerman

    How did the house start out? ie was the flooring already 10-20 years old?...had it been 10 years since the place had been painted?

    They could be gouging you, or it could just be due for some upgrades

    I purchased the house in April of 2021 with these tenants in place. The paint is roughly 3 years old and the flooring I'm not sure on the age. I agree it could be due for some upgrades and I'm not disagreeing with the need of replacing the flooring and paint. It is more of the price. The cost of the install for 910 sqft of mid level LVP I have been quoted is $5,400 and paint at $3,000.


     Both those prices seem reasonable to me. $5 per sq foot on flooring and a few grand in painting seems cheaper than what I would pay in DC, which lines up with Indy being cheaper than DC. But the labor costs wont affect the flooring costs which will be static nationally more or less.

    Also, if its a lower class rental, doesnt seem that unusual. I prefer higher class rentals where Im just doing some paint touchup on turnover.  

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  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    4y

    @Jasper Zimmerman I’m getting 8mm LVP for $2/ft2 and have a guy who installs it for $3/ft2. Painters are charging $2-3/ft2 for walls and $3-5/ft2 for ceilings and trim. Sounds like the prices you’re being quoted are fairly reasonable, maybe a little on the high side. It doesn’t hurt to get a few quotes from some different vendors. $12k/turnover is not normal in my experience. The only time it is ever that high for me is if we’re doing some upgrades not just repairs. $2-5k is more what I’d expect from a 3 year tenancy. However it usually takes a while to stabilize new purchases as I’m buying fixer-uppers so that first turnover can be a doozy. How much are you getting in rent on this place?

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    No that is NOT normal.  I've done evictions and it was no where near that amount.  You should have all of the deposit from the tenant to go against that and the PM should also be talking about court.  How could they have lived there for 3 years with that damage?  Did the PM not to regular inspections?

    I'd hop on a plane and oversee the work myself.  Painting is relatively easy and you can do it.

    Installing a light bulb and some of those are really easy to do (replace broken blinds, remove wall decal, remove hook from ceiling, replace air filter, etc).

    2Reply
  • Allen L.
    Rental Property Investor · Chicago and mainly invests in KS remotely · Member since 2018 · 360 posts · 314 votes
    4y

    The floor cost would be your biggest expense, what was the flooring condition like before? Was it carpet? If it is old carpet or hw floor that can't be refinished due to stain or condition, then that explains the price tag. Part of it is capex, not a true turnover cost. However, this is a problem with purchasing properties with tenants, not only is it harder to evaluate the condition of the unit (the tenant takes great care, hangs a bunch of family photos, vacuums the floor, and puts cute decorations in the kitchen like "FAMILY" letter sign, so you subconsciously ignore the carpet stains and the drywall hole behind the couch), you also don't improve the property right away, leaving you with a larger cost later on, which you must refinance again to take some of it out. 

    It is also somewhat expensive, I can get this taken care of for 8-9K. If the paint is somewhat new, I would refuse to paint completely and just ask for a touch up.

    0Reply
  • Kisha Peterson
    Member since 2019 · 20 posts · 3 votes
    4y

    @Jasper Zimmerman I’m a property manager with over 27 years experience. You’re right, the prices for the repairs are high. A good PM would provide you with at least 3 quotes to ensure you’re receiving the competitive bids.

    Also, if it’s a rental I wouldn’t put LVT unless it comes with a 3-5 year manufacture warranty. Tenants tear things up so expensive flooring may not be best especially if you’ll be replacing at turnover. Nonetheless $5,400 is too high.

    Hope this helps.

    1Reply
  • Jasper Zimmerman
    OP
    Realtor · Cookeville, TN · Member since 2021 · 11 posts · 3 votes
    4y
    Originally posted by @Steve K.:

    @Jasper Zimmerman I’m getting 8mm LVP for $2/ft2 and have a guy who installs it for $3/ft2. Painters are charging $2-3/ft2 for walls and $3-5/ft2 for ceilings and trim. Sounds like the prices you’re being quoted are fairly reasonable, maybe a little on the high side. It doesn’t hurt to get a few quotes from some different vendors. $12k/turnover is not normal in my experience. The only time it is ever that high for me is if we’re doing some upgrades not just repairs. $2-5k is more what I’d expect from a 3 year tenancy. However it usually takes a while to stabilize new purchases as I’m buying fixer-uppers so that first turnover can be a doozy. How much are you getting in rent on this place?

    @Steven K I was getting $975 and increasing to $1,100 for the new renters. The $2-$5k was what I was expecting. This first turnover is definitely a doozy.

    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    4y

    Theresa makes a good point above, it sounds like it will be worth a trip to bang out all the little things personally like removing decals, changing light bulbs and air filters, install doorbell, door stop, outlet cover, towel bar, clean gutter, power wash, screw the gutter downspout back on (5 min.) etc.... save yourself some money even with the airfare calculated in. All that stuff is cheap and easy, but paying someone to shop for all these materials for you and take care of it all, it adds up. Unless there's a big opportunity cost for taking off work for a few days, it could be worth making the trip. I would prefer to take care of this first turnover personally anyway in order to make sure everything is done right so that it won't need to be done twice and that the unit is hardened up/tenant-proofed as much as possible to avoid another expensive turnover down the road. You could also go through the list and remove some of the non-essentials, patch up the paint as much as possible rather than all new paint, go with carpet instead of LVP etc. to lessen the sting as much as possible. Tough one though, my sympathies go out to you.    

    0Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    4y

    @Jasper Zimmerman

    Definitely not normal for turnover. Was the flooring and walls bad to begin with? Maybe they were at the end of their usable life and is time to replace. If not, then the tenant should be getting charged for excessive damages. Is the pm charging the tenant?

    0Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    This is the hidden costs people miss on these “cheap cashflow” houses in rust belt cities.

    $12k seems high but if doing floors and painting might not be that crazy. Id bring some private non manager contractor out too and get quoted. 

    1Reply
  • Maria S.
    Member since 2018 · 45 posts · 48 votes
    4y

    For the rent you're getting, the cost is high. Take a look at nearby properties for rent - do they have LVP or just some fancy linoleum? You might be over-improving the property for the area.

    0Reply
  • Craig Janet
    Member since 2019 · 223 posts · 261 votes
    4y

    As others have said painting an entire house and new floors isn't "tenant turnover" this is capex that you should have budgeted for when you bought the place. Ask yourself if these are really needed. How bad is it really? Can the place rent as is at a lower rent? The PM doesn't care. The more money you spend, the easier the PM's job is and the more money they make. 

    1Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    4y

    This is not a normal turnover, this tenant definitely beat up the property more than typical. This is why I never understood low price/low rent single family rentals for out of state owners who have to hire people to do everything. You get 1 bad turnaround and your cash flow for the foreseeable future is completely wiped out. 

    1Reply
  • Jasper Zimmerman
    OP
    Realtor · Cookeville, TN · Member since 2021 · 11 posts · 3 votes
    4y

    Thank you everyone for your suggestions and feedback. I appreciate the advice and knowledge from the more experienced investors. 

    0Reply
  • Account Closed
    Investor · Leander, TX · Member since 2016 · 299 posts · 402 votes
    4y

    Turnover is a profit killer. 

    I had a house in Cleveland, Ohio for 4 years (2016-2020) and it had 4 different tenants every year I had it, and the cost of turnover averaged $5K to $9K every time. Painting was usually the biggest expense. 

    I got out of that market and sold. 

    2Reply
  • Nate Pucel
    Member since 2019 · 45 posts · 7 votes
    4y

    @Jasper Zimmerman

    The way I'm interpreting this is that either the floors needed to be replaced when you purchased, or you're wanting to replace them to vinyl to be more rental friendly?

    Either way, in terms of cost, how much SF are we talking in flooring? What's the price per SF of the vinyl you're choosing? How much drywall repair is needed? And what are the other odds and ends of things that are needed? Those little things can add up quick.

    0Reply
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
    4y

    This seems way too high. I am not a huge proponent for carpet, however depending on the class of property, tenant, and amount of turn over it can be way cheaper. Sometimes it can just be cleaned though often it will need replaced. 

    0Reply
  • Jasmine H.
    Rental Property Investor · Houston, TX · Member since 2014 · 139 posts · 140 votes
    4y

    @Jasper Zimmerman no it is not normal at least not for me, especially for that square footage. We unfortunately had to let go of one of our PMs due to unreasonable quotes and the issues they were quoting for weren't even problems to begin with. I suggest getting a friend who may live near the property or getting out there yourself to take a peak and see what really needs to be done. Sometimes a nice cleaning does the trick.

    0Reply
  • Jasper Zimmerman
    OP
    Realtor · Cookeville, TN · Member since 2021 · 11 posts · 3 votes
    4y
    Originally posted by @Nate Pucel:

    @Jasper Zimmerman

    The way I'm interpreting this is that either the floors needed to be replaced when you purchased, or you're wanting to replace them to vinyl to be more rental friendly?

    Either way, in terms of cost, how much SF are we talking in flooring? What's the price per SF of the vinyl you're choosing? How much drywall repair is needed? And what are the other odds and ends of things that are needed? Those little things can add up quick.

    The flooring probably needed to be replaced but was not as noticeable when purchasing the home due to the tenants living in it at the time. I'm wanting to replace with the LVP to be more tenant friendly my quote for replacing the flooring with carpet came in at $2,300 vs the LVP at $5,400. I do understand that this is a CAPEX and should have budgeted it into the purchase and rehab amount for this purchase. The amount of flooring being replaced is 910 SF. The drywall repair is minor but in each room.

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