Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
So, I have been evaluating and conducting research on most costly turnover expenses, I have a few that have made my top (5) list. I am curios to hear from other BP Members, what there most costly expenses are for tenant turnover:
As always I will begin with my list:
Painting
Flooring
Trash-Out
Yard Maintenance
Time
Please feel free to post your problems and also the methods you have used to reduce your burden.
Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
10y
Steven Gesis Number one on my list is the rent loss during the vacancy period. It's a double loss. No rent coming in and mortgage payment going out. If a property rents for $900 a month and the payment is $450 a month doesn't that count as a $1350 dollar a month loss?? add utility expenses and insurance costs to that and it don't take much time to out weigh the rehab costs. The rest can vary depending on how the tennant left the property. Just my opinion RR
Rental Property Investor · Scottsdale, AZ · Member since 2016 · 296 posts · 243 votes
10y
Painting is up there for sure - fortunately in AZ we can usually charge tenants for part of it if there is "damage.
Flooring - doesn't have to be. Invest in a good product and install it correctly, and it'll take tenant abuse no problem. I prefer polished concrete or epoxy floors, yes, even in C+ apartments.
Trash-out. Yep, it sucks. However, my last 2 evictions I managed to have them run semi-smoothly, and they left the place fairly clean. Thats more of a people problem then a construction problem.
Yard - can't help you there, I live in the desert, and do Xeriscaping and steel everywhere
Time - engineer tenant-proof buildings and turnover goes down dramatically.
Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
10y
Steven Gesis Number one on my list is the rent loss during the vacancy period. It's a double loss. No rent coming in and mortgage payment going out. If a property rents for $900 a month and the payment is $450 a month doesn't that count as a $1350 dollar a month loss?? add utility expenses and insurance costs to that and it don't take much time to out weigh the rehab costs. The rest can vary depending on how the tennant left the property. Just my opinion RR
Real Estate Investor · Schaumburg, IL · Member since 2014 · 76 posts · 30 votes
10y
Turnover Cost - #1 Vacancy
We do our best to closely monitor the renewal dates (auto reminders weekly) to minimize the loss of income from vacancy during a turnover. We try to be sure everyone on the team is focused on their role in the renewal process to reduce unnecessary delay.
I agree. Painting is the biggest routine expense. Flooring is less frequent but similarly expensive when it needs replacing.
Marco-
Yes, I learned to mitigate this risk, by making sure I paint all the assets I own in the same uniform color throughout. It does reduce the cost at turn-over, but it is always expensive.
Flooring less frequent but I o longer use carpet, so it is almost not an issue at this point, however, carpet just does not show 2x the same, I hate that stuff in rentals.
Painting is up there for sure - fortunately in AZ we can usually charge tenants for part of it if there is "damage.
Flooring - doesn't have to be. Invest in a good product and install it correctly, and it'll take tenant abuse no problem. I prefer polished concrete or epoxy floors, yes, even in C+ apartments.
Trash-out. Yep, it sucks. However, my last 2 evictions I managed to have them run semi-smoothly, and they left the place fairly clean. Thats more of a people problem then a construction problem.
Yard - can't help you there, I live in the desert, and do Xeriscaping and steel everywhere
Time - engineer tenant-proof buildings and turnover goes down dramatically.
Darwin-
At move out if the home is not the same condition as before and considering I always have fresh paint on the walls, the tenant is responsible for wear on the walls or they can simply elect to paint themselves, we always provide the color codes for tenants, reduces the amount of work for us to. Not perfect, but it certainly can be controlled.
Agreed, we only install a high quality laminate that is scratch resistant and easy to maintain, not to mention easy to clean and show for the next tenant.
When this does occur, lucky for me I only know what an eviction looks like maybe 2x a year on my entire portfolio per year, if it gives you an idea the size of my portfolio it is only 1% approximately, its because of an awesome PM services I have. Its expensive when it happens, not huge though all the time at-least not anymore.
Yard - you have it EZ! :)
Agreed this is a perfect statement, could not have said it better myself "Time - engineer tenant-proof buildings and turnover goes down dramatically."
Steven Gesis Number one on my list is the rent loss during the vacancy period. It's a double loss. No rent coming in and mortgage payment going out. If a property rents for $900 a month and the payment is $450 a month doesn't that count as a $1350 dollar a month loss?? add utility expenses and insurance costs to that and it don't take much time to out weigh the rehab costs. The rest can vary depending on how the tennant left the property. Just my opinion RR
Ralph-
Great point, yes, rent loss is a big one in my book, but this is going to happen I think this is more of an external factor or by-product of rentals, you cannot always control the renewal, it is super important to try to secure a renewal and mitigate this loss as best possible and as often as possible.
We do our best to closely monitor the renewal dates (auto reminders weekly) to minimize the loss of income from vacancy during a turnover. We try to be sure everyone on the team is focused on their role in the renewal process to reduce unnecessary delay.
Great points Linda, this is super important as it pertains to the type of culture you cultivate within the orginization. This is super important for investors.
Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
10y
@Steven Gesis How many days do you typically see a place be vacant during turnover? Is it vacant because of repairs and work time, or after the repairs are done and waiting for the new tenant? I'm know this varies depending of amount of damage and wear, but was wondering what you saw in terms of schedule of turnover.
@Steven Gesis How many days do you typically see a place be vacant during turnover? Is it vacant because of repairs and work time, or after the repairs are done and waiting for the new tenant? I'm know this varies depending of amount of damage and wear, but was wondering what you saw in terms of schedule of turnover.
Currently, we are trending at about 3 weeks from move out to move-in.
Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
10y
@Steven Gesis Thanks for that info. I'm at 10 days with this one particular house, and happy with my progress, but wasn't sure what was normal or standard.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
10y
Appliances. If you have to replace something I like to do it at turnover. Additional vacancy due to an apartment update can increase your costs if you don't plan well.
Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
10y
@Colleen F. What type of appliances are you buying? Do you ever go with used or are you buying stainless steel or something nice? What's your average schedule of turnover days?
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
10y
@Julie Marquez Not stainless if I can help it (hate it)black/white. I don't do used because it isn't worth it most of the time for these properties. They also don't deliver. If you have to replace them Appliances are just a big expense at turnover. They keep changing the models so you can't pick one, stick with it, shop around. Turnover of about 3 weeks but could be longer depending on the time of year.
Poor planning is the biggest contribution to turnover cost. If you are updating anything at turnover planning will help shorten your vacancy and decrease your cost. I recently had a tenant who wanted to extend and had to say no because we had already lined up everything for a kitchen redo.