How Long Do Your Tenants Stay?

Question

I just did an annual report for a lender, and while reviewing my rent roll discovered an interesting breakdown. My complex is 24 units, all 2 bed 1 bath, avg rent $860.  I have Aprox 33% of residents that have been there less than 2 year, 33% have been there 3-5 years and another 1/3 have been there over 5 years!

Our student population is most transient - though they often stay for 2 years.  Our sec-8 population only moves when they have to (I have 3 of 8 who are going on 7 years!), my general population is a mix from 1-15 years.

In my SFR portfolio I have exactly the same 1/3, 1/3, 1/3 breakdown even though the clientelle and price point are considerably more than the apartments ($1200-$1850).

So, I'm curious, How do your rentals breakdown? And if you know why, include that too. Thanks for your responses!

Roy N. · Answer

To answer @Curtis Bidwell 's original question:

- a majority of our properties are student rentals which tend to be a very transient clientele.  Most stay 1-2 years and then graduate and move on.

- until recently we had a set of inherited tenants who had been in the unit for almost 9-years ... alas, the time has come the walrus said ...

- we have another inherited tenant - the old codger - who has been in 'his' unit forever.  He's not even sure when he moved there, but is fairly certain Mulroney was Prime Minister (which would mean Reagan or Daddy Bush was President).

Curtis Bidwell · Answer

Thanks, @Jeff Rabinowitz for your response! To clarify, I broke it down as under 2 years, 2-5, and over 5 years.

Like you, I have some I interact with very occasionally (like when I send them their rent increase letter!).  One family I haven't actually seen in 3 years!  I do drive by regularly and communicate via email from time to time.

@Roy N. I definitely identify with the student population! We went away from it for awhile due to poor care and payment history. But we added parent cosigners and are doing much better now!  A small layer of accountability goes a looong way!

Account Closed · Answer

For as long as they pay!

I'm less than one year in with my two units (so far). These are some interesting stats. Hopefully more people chime in.

Stephen E. · Answer

@David Krulac That is quite impressive. I have one on a two year lease while the others started on one year leases and are now month to month, which is how it works here. They could go, but my hope is that a number of them stay. I am not as interested in having all of them be long term tenants, due to rent control. When they leave I get vacancy decontrol and can raise rents to market for a nice boost. Turning over every 3-4 years for a number of them would make for a nice portfolio effect. Keep some long term (hopefully the low maintenance ones, and here I mean interpersonal maintenance not necessarily maintenance to the unit, although they often coincide) and then turn over some others to yield market revenue streams.

Otherwise it is good to hear that you have maintained lengthy tenancies while keeping rents up. You must have good customer service, desirable units, a tight market or some combination of the three.

David Krulac · Answer

@Stephen E.

Costs do go up every year.  We do have some 2 and 3 yr leases.  We typically raise rent on 1 yr leases probably about every other year.  The 30 yr tenant and the 17 yr tenant we just raised their rents 3 years in a row.  And the 21 yr tenant we raised their rent almost every year.

While costs are a factor in raising rent, competitive rents are also a factor.

On another BP post today I mentioned raise rent $200 on a $550 rent.

Stephen E. · Answer

@David Krulac How often do you raise the rent on these long term tenants? I am just wondering if you exchange below market rents for tenant longevity. I am not sure of the relative merits of the two but I have tended to raise rents myself. My costs go up, so should theirs.

David Krulac · Answer

I have a 30 yr, 21 yr, 17 yr, 15yr, 13 yr, etc.

Had a 21 yr tenant who is no longer a tenant because I sold then a house.

Lost two 7 yr tenants to the first time homebuyer's credit.

I have no inherited tenants and properties with less long term tenants have been owned for shorter period.  Some properties have only ever had 1 tenant. That's about 40% of the properties.

Marcia Maynard · Answer

Fifteen Units (three SFRs, two duplexes, one 8-plex)

< 2 yrs = 7;

2-5 yrs = 0;

5-10 yrs = 3;

10-15 yrs = 3;

15-20 yrs = 0;

20-25 yrs  = 1;

25-30 yrs = 1.

Jeff Rabinowitz · Answer

@Roy N., yes, they probably are. One tenant has been expecting a transfer out of State for a year now and would not wish to buy at this time. I purchased the house he is living in before the crash and I couldn't easily offer it to him at a competitive price right now. The other tenant is living on her own for the first time in her life. She lived with her mother and she inherited the house after her mother died but she did not wish to stay in the house where her mother died. I suspect she would see home ownership as a burden. She is a poor housekeeper but a good payer. I am happy to accommodate her. She is young so my daughter may be her landlord someday.

Roy N. · Answer

Are they stable enough to be borrowers and take care of the house?

How Long Do Your Tenants Stay?

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