A couple of things on turning over a unit between tenants

13 Replies

I have a few things that needed input from BP landlords on turning over a unit.

SHOWING A UNIT WHILE STILL BEING OCCUPIED

This is something I have never done I always waited till the unit is vacant and I have a chance to clean and get it to at least a semi-presentable state before I show.  I would advertise a week or two prior to existing tenant moving out and tell everyone the unit will not be available for showing until a certain date...then I'll call back and schedule all the viewings later.  I know the prevailing opinion on this is to show the unit as soon as you know it's going to be vacant to minimize vacancy but for me the reasons I did the opposite are: (1) The applicants (and the existing tenants) appreciate the courtesy of not being hassled the last few weeks when things are hectic; (2) The unit is rarely in a presentable state with packing boxes out, pictures on the walls removed...(3) it's a challenge to schedule for a mutually convenient time for three parties as I prefer the existing tenant to NOT be home.  But this one time I broke my own rules as the existing tenant is moving out to another part of the state and is gone three days out of seven and he encouraged me to show it...so I did.  I told the applicants that to expect the property to be a bit messy and it is not the final product and it needs cleaning, painting and some repairs. and even though I set the expectations I still get many "there are some smudges on the wall and nail holes can you knock $25 off the rent?" and "these blinds are crooked how about giving me a better deal and waive the security deposit?"  Funny thing is those who made those comments were all females, the guys didn't seem to mind, or may be they didn't even noticed.  I guess I am going back to not showing a property until it's ready, I don't know how you guys can make that work.

DO YOU CONTINUE TO SHOW AFTER AN APPLICANT HAS BEEN APPROVED?

Pretty sure the answer is yes.  For me I continue to advertise, I do slow down on the showings because I couldn't in a straight face tell someone "yes the property is still available" which is technically true but if I already have an applicant, collected app fee, did the screening and I approved it, and all I am waiting is the lease signing and collect my first, last, SD, I feel I need to let them know that I haven't sign a lease, the situation is dynamic and can change but I have already approved an applicant, I will show it if you are still interested and 10 out of 10 the caller would not want to see it and just say to let them know if the situation changes.  Now of course the applicant can back out after only paying a $35 app fee so I normally push for a lease signing ASAP (within days) to collect my money and get everything in order.  However this time around I have a series of projects - electrical, water heater, roof, counter top, termite tenting...and the termite tenting is the schedule killer since I need the roof done before tenting due to new wood being brought in for repairs that may be infested, and I don't want the tenant to move in and have to move out for a few days to tent, so the scheduled move in date is set 3  weeks away, which means we probably won't sign a lease till later.  So the question is, do you continue to show just in case the applicant finds something else and back out, or you collect a deposit to hold the unit and stop showing?  If you continue to show, do you say anything to new callers to let them know you already have someone lined up?  If I don't say anything I would feel like I am wasting someone's time and being deceiptful, if I say something it is pretty much the same as saying it is already rented.

CAN ONE SIGN A LEASE WITH AN OPEN ENDED MOVE IN DATE?

As I mentioned earlier I have a series of projects that need to be executed and some of those are tasks that need to be done in that order and throw in the permitting process, historic preservation board's oversight, power company connect and disconnect schedules, termite tenting schedule, weather, I do not have full control over when the unit will be available, so the move in date is more like "NO LATER THAN FEB 15" but could be sooner.  This makes it difficult to get a lease executed unless we can sign a lease with the NO LATER THAN clause.  Is it better to just collect a holding deposit or to go ahead and execute a lease now with an open ended date and revise it later?  Pros and Cons?

Do we show the unit while it is still being occupied?  This would depend on the class of rental you have among other things.  Our rentals are all A/B, so we do show the units.  Our lease clearly spells this out.  This allows us to often have 0 days of vacancy.  We also bring up every possible issue to the prespective tenant during the showing, so they know we are aware of an issue and will correct it.  It also lets them know that we are detail oriented.  However, if we had an instance where the house was a mess, we would postpone showing until the house was presentable.

Many people are unable to see past construction or clutter, so the house definitely has to be in good condition.  We have tried showing a house while under light construction, but it generally turns into a waste of time for us to show it.  We have found that if we want good tenants, we need to show them a good and presentable product.

We approve an applicant with the expectation that the lease will be signed and a holding deposit made very soon after we approve the application.  If the applicant isn't prepared to this step a day or two after the approval, we move on to the next applicant, and continue showing.  If the move-in won't be for a few weeks, we always get a holding deposit.  We do use a screening service where the prespective tenant pays a fee.  If the tenant goes through that process, we know they are normally very serious, so we stop showing if the screening goes well.  We stop advertising as soon as the lease is signed.  Since my wife does our property management, we stop the process as soon as possible to reduce her burden.  Our last house had about 30 inquires within one week, so that can be very time consuming.

We would not do an open ended move in date.  We schedule the move in date for a time when we know the property will be ready.  I could see this working fine in most cases, but this brings up a lot of potential issues that I would rather avoid.

I only show an occupied unit if the current tenant is amenable to it and I know the place is clean and orderly. If they tell me it's a mess and they're stressed, I will wait until they move to clean and do repairs. It's not worth agitating the tenant and showing the unit in less than appealing condition. It's a good idea to take names/numbers though.

I continue to show a property until a lease is signed and all money owed is paid - that means first month's rent and security deposit. For our condos, the tenant has to also be approved by the condo association and a signed lease is required for the process. So even though they have paid in full and signed the lease, they could potentially be denied. During that process, I'm still advertising, but am not showing the unit. I'll take names/numbers and let them know what the situation is, and I'll give a courtesy call to let them know one way or the other.

For our SFRs, the property is available until all money is paid and the lease signed. I will hold a property for a few weeks with all amounts paid, depending on the amount (and qualifications) of additional applicants. 

If a tenant isn't certain about the move in date, the lease will say something like "on or about January 1, 2015", and the second month's rent will be prorated based on the actual move in date of the current month. 

If it's me as the landlord that can't guarantee the move in date, the lease states:

"The landlord is not responsible to the tenant if the landlord cannot give the tenant
possession of the dwelling unit at the beginning of the term. The tenant may cancel this agreement and receive a refund of all money paid if the tenant cannot have possession at the beginning of the term."

We had an SFR that had the copper pipes stolen a few days before the tenants were going to move in. The re-plumbing of the house took about 2 more weeks, but the tenants were willing to wait. They had already paid the full security deposit and met us at the house to give us the first month's rent when we discovered the theft.

Given the many moving parts of your renovation which are out of your control, I know I'd sleep better by not juggling tenant commitments and showings and money until I felt the move-in date could realistically be within 2 weeks; i.e., wait until the beginning of February to see where things stand.

We do not show a unit until it is almost ready for move-in.  If we are just finishing up the make ready and have a few things to tie up, we explain this to the prospective tenants. Our tenants tend to be long term and there is always something to do to refresh a property before the next tenant, so I can't imagine we will ever have zero vacancy during turnover. Ours are B and C properties.

When we advertise, we state the date the unit will be available.  We will do phone interviews and answer questions about the property and arrange to show it when it is ready.  We are upfront with prospective tenants about our process. When we accept applications, we batch them and rank them according to our rental criteria. We process only one application at a time. If we do not process an application, we refund the application fee.

Once we approve a prospective tenant and offer to rent to them, we will collect a holding deposit and make a decision with the tenant about the move-in date. The amount of holding deposit will depend on the amount of time we are holding the unit and the current unit rent.  Once we take a holding deposit, we do not do any more showings. 

However, we will keep the ad running and let callers know we selected a tenant, but that the move-in is still pending.  At that point we offer to take the inquirer's name and number and promise to call them if anything changes. Often they will ask if we have anything else available, and if we do, we let them know about other properties or guide them to other promising websites.

We sign the rental agreement and collect rent and security deposit and move-in fee on move-in day. We call the utility companies together with the tenant to change the utilities at that time. We give the tenant a move-in information packet and move-in gifts. When we hand over the keys, we stop all advertising. If we were receiving tons of calls on the unit, we would stop the advertising sooner, perhaps even at the time we took the holding deposit. If the unit had a "For Rent" sign, we finish the move-in process with the tenant and I taking down the sign together. This adds a bit of flair that tenants seem to like.

In the situation as you describe, if the unit would not be ready for quite some time, I would pick a "no later by" date and make it firm. Our holding deposit form covers different contingencies quite well. It is important to us and to prospective tenants to have a firm commitment and a clear move-in date. So we aim for that. However, I were to take the unit off the market for a significant period of time (for my needs), I would require a substantial holding deposit that would cover my loss if the tenant were to default. 

Marcia Maynard, Fischer Properties | Podcast Guest on Show #83

 I don't show while of occupied. 

I will continue to show until I receive first months rent, security deposit, and signed lease. 

I have allowed someone to move in a few days early without pro rating.  It was a weekend, more convienent for them, they had great credit, references, and income. 

I think its entirely a case by case basis for me. 

I just showed a house the day before xmas eve even though the tenant had just moved out a few days prior and I hadn't even seen the place myself in 6 months. But I knew the demand for the unit and knew I'd get it rented as is provided I could sell them on what was going to be done to what.

Had 8 showings in a 2 hour window and had several applications turned in at the showing (usually they take them home). 

But there are some houses where I just don't want to deal with the short deadlines myself and don't like scheduling showings with tenants still in the home. I'd rather just eat the one month of vacancy so I lessen my own stress level.

I've also had some good tenants where I felt comfortable showing the property before their lease was up and the new tenant was moving in the day after the current tenant moved out.

I don't know that there is a right/wrong answer to it for me. I just think it depends on how busy I am, what kind of area and home it is, and how cooperative I think the tenant will be.

I've had a few units where the departing tenants were extremely cooperative and neat, and had the places rented before they left. But that's rare. 

Originally posted by @Mike H. :

But there are some houses where I just don't want to deal with the short deadlines myself and don't like scheduling showings with tenants still in the home. I'd rather just eat the one month of vacancy so I lessen my own stress level.

I don't show for the stress reason.  I would rather have them move out.  Take the time to get it rent ready and address any maintenance issues while vacant even if it means I eat a month.  It's less stressful on me and I know the place is ready to go with no maintenance calls right after new tenants move in. 

I don't show until tenant has moved out.  I do offer a middle of month  move-in date to prospective tenants. 

I think I will go back to showing the place after it is vacant and I have a chance to clean it up.

I also continue to advertise and take names and numbers once an application is approved and stop the showings.

For those who continue to show the property between the time you have an approved applicant and when the lease is finally signed and money collected (or holding deposit collected), if that duration is more than a day or two (say a week to 10 days), and you continue to show the property, do you tell the applicants they are looking at something that is most likely half gone?  That's what I struggle with.  I don't want to waste anyone's time (including my own).

@Sam Leon  

We will show units while still occupied and, as a consequence, frequently have units relet before they become vacant.

When we do this, we coordinate with the existing tenants for a couple of blocks of time - one weekday evening and one on the weekend (Saturday afternoon) into which we will book all viewing appointments.  When a unit is occupied we have individual viewings and do not hold open houses.

We often send in our cleaning service the day before the viewings - the existing tenants appreciate this as well - to make certain all is looking its best.


As an example, we have a student house where the present tenants are finishing their degrees and moving one.   We have already begun soliciting interest / applications (the first two came from our waiting list, the third, word-of-mouth) for when the house becomes vacant next summer.    We will schedule viewings for the end of January, early February.

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This method has worked great for us:

1)  Before the current tenants start packing up (maybe a month ahead of moving), we tell them that we schedule an open house there.  We always put that right to do so into the lease.

2) We offer the current tenants a reward of $50 if any of the attendees from the open house consequently signs a lease.  They become incentivized to earn the $50 from the open house, so they make everything look clean and nice.  They become self-motivated.

3)  The new tenants' lease begins only a couple days after the old tenants' lease ends.

Then voila, for only $50, we only have a couple days of vacancy.  The $50 reward is far cheaper than having a couple weeks of vacancy between tenants.  And I only have to show it ONCE!!  We do this from long distance, so I don't even have to be there.

@Sam Leon  

I tell them straight up.  Your approved, but this is firt come first served and I will keep showing it.  Whoever pays the first, SD, and signs the lease first gets the place.  The serious people won't wait to pay and sign in order to secure.  

We usually show while occupied. The disadvantage in our student rentals is that if you have guys you will get another set of guys because the girls can't see past the mess. For year round rentals I have some tenants that I know I would not show while occupied they are just too messy. The other reason not to show while occupied is when it stresses me out to do it.  I liked the $50 incentive to the current tenants have to try that with the difficult ones.

We keep showing when rented always. I have had multiple situations where people change their mind.  Most of the time it is people who say I am looking for a place because I am  splitting with my husband, wife, BF, GF etc... I have taken deposits and had signed leases in these situations and had it fall through.  I am honest with applicants but I do keep a list of others who are interested.

We almost never use an open ended move in date. I will prorate for sooner but we have to agree on a date upfront.