Why Are We Okay With Losing Income Every Time a Tenant Leaves?

Question

I’ve been thinking about this a lot lately:
If a tenant moving out destroys our cash flow, why is that considered “normal?”
Isn’t that a broken system?

Two months of no rent.
Thousands in repairs.
Weeks spent finding someone new.
And we just call it part of the business?

What if there was a way to set up your lease—and your tenant relationship—so that you didn’t have to restart the clock every year?
I'm realizing it's not about avoiding turnover completely...
It’s about choosing tenants and agreements that make turnovers rare (or even unnecessary).

Curious if anyone else has made changes like this?
Would love to hear what’s worked for you.

JD Martin · Answer

Well, this post sounds like the beginning of every other advertisement on Youtube these days. But on the off chance that it's not an advertisement, and you're really wondering how to avoid thousands of dollars worth of losses on tenants - screen well, keep rents at or slightly below market rates, maintain and repair your properties promptly as needed, be a responsive landlord, and don't deal in C and below properties and you're probably as close to guaranteed as you can be.

Steve K. · Answer

I just had a vacancy and filled it within hours. Literally 55 replies to the listing in one day. The solution is to only buy in good locations.

Eric Gerakos · Answer

If you're experiencing "Two months with no rent" you're not buying where people actually want to live,  you're buying where its cheap.

David Krulac · Answer

We have had several tenants stay over 30 years, and average 12.5 years of tenancy. WE ask on our application How long have you stayed at your current residence?  We also ask in the interview, "If we rent to you, how long would you plan to stay?" We look for tenants who have stayed a long time and obviously don't like to move. We look for families who have kids in the school and are looking to keep their kids, or start their kids in the local schools.  We had a tenant who worked in Washington DC and another who worked in Baltimore, Md, who lived in our Pennsylvania rentals, just so their kids could go to the local schools, which are highly rated. We primarily rent single family detached houses in neighborhoods with good schools, low crime and mostly owner occupied neighborhoods.  In some cases, we have the only rentals on the street, and the tenants stay so long the neighbors think they own the place.

Jill F. · Answer

When I first started, I thought I would want tenants who would stay as long as possible. Now I really like to turn over every 3-7 years. This lets us keep rates at top market prices keep our places updated and in better repair. It avoids problems with those long term tenants that start acting proprietary about the property and  'bitter renters' that are mad because they really wanted to own but couldn't get financed and they feel like they have an ownership interest in our property because they paid off the mortgage. (nope and nope). Once we have updated a property, we can often complete turnovers in just a couple of days with the required notice and good planning.

Wesley W. · Answer

Very pitchy.  What are you trying to sell us?

Michele Fischer · Answer

I don't think it is even about avoiding turnover.  It's about avoiding the expensive turnover costs.

We have been able to manage very short vacancies where the tenant left the unit in great or even good condition.  It used to be the outlier that there was a turnover that cost thousands of dollars, now it feels like the norm.  When we do maintenance inspections, we know right away which tenants will be costing us money or not.

Better screening, better relationships, setting expectations about what it takes to get the deposit back, better overall engagement, but it comes down to... does the population have the time, money, and skill to take good care of a unit, and do they understand the connection to the lack of affordable housing when they stop paying and stop caring.  Society doesn't see the turnover as a cost that contributes to broken housing options.

John Morgan · Answer

Vacancies within a few years crush profits. I look for lifers and want people who will stay for at least a decade. I keep them in well under market rent and treat them well. I look at my tenants as if they’re my partners. I take care of them and they’ll pay off my mortgages and pay me good monthly cashflow.

Amber Stout · Answer

Hey Zeth. We’ve lean into longer term relationships with tenants too—lots of screening upfront with clear communication upfront, renewal incentives, and small appreciation gestures throughout the year go a long way in reducing turnover.

Also started structuring leases with possible small rent bumps built in and options to renew early. If someone’s solid, I’d rather keep them happy than roll the dice on a new tenant every year (and deal with two months of no rent + repairs like you mentioned).We also send $25-$50 gift cards during some holidays just to keep it more "humanly" than business. We typically have tenants that stay for years as we try to treat them like humans.

Totally agree—it’s not about avoiding turnover, but designing the business in a way that makes it the exception, not the rule.

Marcus Auerbach · Answer

Great properties and good locations.

After I started to realize this about 10 years ago we did a portfolio-purge and exchanged all properties that were at elevated risk of higher turnover, unpaid rent and damages.

I often get questioned about our approach to finish basements and add a bathroom, because we don't get much higher rents for adding these features. But an average turnover costs us about 5k, so that is where the ROI happens.

Pro tip to finish basements:

LVP makes a basement sound like a parking garage and can trap water underneath. Carpet with pad sounds much better, but the pad does not do well with water. We have started to use 24x24 indoor outdoor carpet tile in dark grey. They are designed to get wet and then dry.

And instead of drywall, we spray the ceiling in a flat charcoal grey, including all the pipes, cords and ducts. Cheaper and more headroom.

Why Are We Okay With Losing Income Every Time a Tenant Leaves?

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