Real Estate Agent · Burbank, CA · Member since 2012 · 271 posts · 79 votes
Are the majority of tenants from Indy staying in a property for 12 to 18 months, destroying the property and then moving to the next remodeled property? Or is it just my luck?
One of my tenants left on December 31, after being in a property for a year, and I received a quote of $8,400 to make it rent ready again. My average turnover seams to cost around 5-6k. I have to replace the carpet almost every time when a tenant leaves, how can they destroy it that much in 1 year?
How can you make money when your cash flow is a few hundred a month?
Your turn over costs are very high. From what I read on this board, OOS turn key investors are getting hosed. Caveat Emptor.
Your PM is charging a premium over and above what the painters and flooring contractors are charging. Also, with OOS properties managed by a PM, there is no incentive to economize. For example, there is no incentive to do a fast and quick touch up paint over charging for repainting an entire room -- in fact this may not even be possible if no one kept records of the brand/color and finish of the original paint. There is no incentive for the PM to inspect the properties (and charge tenants for damage ) mid tenancy. There is no incentive for the PM to walk through with a can of spackle and do the "minor drywall repair" themselves.
My husband and I self manage class B apartments. We do our own painting, fix drywall holes ourselves, repair our own closet doors, and replace kicked in door jambs. None of this is rocket science -- it is a fairly limited skill set, with a fast learning curve. We can turnover an apartment quickly and cheaply. We solved the trash out problem by presenting a written list to tenants at move in what we charge for dump runs, cleaning refrigerators and oven, etc. Does your PM do this?
Are you having your PM send you a video inspection every 6 months?
For $8400, I would fly out there with a sleeping bag and my Home Depot card, rent a pick up and get to work.
@Ciprian L. If your property was in a low end, rougher area of Indianapolis, I would say that's pretty typical but at $1000/mth rent, that is unusual from my experience. The average tenant longevity we see is 2-2.5 years. If you're turning tenants over every year, you will NEVER make money in this business. $5K-$6K turn over cost is also crazy when tenants have only been there a year. There's no way your turn over costs should be that high but regardless, you might want to consider replacing the carpet with a good wood laminate. It's more expensive upfront but pays for itself in the long run. On a final note, a lot of people expect lower vacancies in A class properties, but in our experience that's not the case. These tenants are often renting temporarily due to job transfers or while they save for a down payment, however, they are also less likely to trash the place in a year. Based on the rent however, it sounds like your property is in more of a B class area of Indy which should perform much better than what you're seeing. I've been active in Indianapolis since 2010 and know the market well. If you want to DM me with the address and who your PM is, I'll be happy to look at it and give you my thoughts.
I have properties in Indy in the 77K areas and in the 60K areas and I haven't had these kind of crazy expenses as you have described. Since 2015 I didn't have turn overs, not even on the lower end properties.
I think I owe it to my PM , who does an excellent job and really cares for his properties and clients.
If you want, PM me and I can share what I know, and contact you with my PM.
perhaps he can offer a lower cost of rehab or maybe give you some advice.