I just finished turning a rental and thought I would share the numbers. We did replace the flooring in part of the home at a cost of $1800, but the rest of the turn was $500 and about 15 hours of my time.
First, this place was left in excellent condition. But, it still needed paint in a couple of rooms, 1 new toilet, 1 new light fixture, a shower rod, a new air vent cover, oven drip pans, some miscellaneous repairs and a deep clean.
If you are new to buy and hold, don't fool yourself on the real expenses associated with rental properties. Be sure you are factoring repairs, turnovers, vacancy and capex, among the other obvious expenses. This is a solid A- property that attracts great tenants, but I can and do expect turnover costs each time. Yours may be different - just make sure you know them and are funded for them.
It actually would have cost more, but we only had 3 days before the new resident moved in, so I did all the work myself except flooring.
@Derek B. Posts like this are important. Thanks for sharing this. These are the type of costs that newer investors never even think of.
Congrats on getting another tenant in there quickly as well.
Don't for get the cost of replacing appliances. We usually replace the refrigerator and 30 inch basic gas stove every 5 years. They do take a beating over the years with broken knobs, missing items and such. We buy scratch and dent from an appliance store.
@Derek B. thank you Sir. Next time I turn, I'm going to share my numbers as well.
Let me add that turnover expenses have always put me back on my heels. I started collecting coupons and discounted HD gift cards to soften the blow. Since I only have 10 units, it's a manageable thing to do.
Thanks for sharing @Derek B. I'm going through this right now. I have an old 1955 3/2 ranch that has undergone a tremendous amount of CapEx in the last two years. I'm not sure I could have even factored these costs in, given it was my first rental. 47% of gross rents yr 1 and 40% in yr 2 for repair/reno. Replacing ductwork this year. Vacancy and turnover has been minimal though! I'm now approaching this property as a flip and planning an exit strategy.
In my calcs today, I estimate 10% Maint and 5% vacancy. Do you also put something in for CapEx?
that's a cost of doing business. Be happy it's a great area. Some of ours are in bad areas and it costs us more. I'm getting all used appliances for them and laminate flooring.
I have three units turning over in the next 3 months so I'll keep you posted.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.