Accounting for turnover costs

[Noah McPherson]

I know some people have probably done a lot of turnovers in their careers. I'm just curious. Does your deposit typically cover the entire turnover? I'm wondering because if it doesn't, that would take a chunk out of your cash flow. For example, if you have a 1000 dollar deposit, but the turnover costs 2000, you'd have to factor the extra $1000 in maintenance or vacancy expenses correct?

[Adam Martin]

A lot of the turnover costs aren’t going to come out of the deposit.  You can expect to at least touch up paint, freshen up landscaping, and periodically replace carpets that are just worn out.  Vacancy and turnover costs are a killer and I try to avoid them if possible but also great opportunities to get back up to market rent if you have fallen behind.  Remember deposits are to cover damage and for larger items you need to prorate them so budget accordingly.  Even if the tenant did destroy your 3 year old carpet you are not entitled to full replacement from the deposit.