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ForumsArrowGeneral Landlording & Rental PropertiesArrowHow long are your tenants staying?
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How long are your tenants staying?

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Alaina Lindquist
Real Estate Agent from San Diego, CA

posted about 2 years ago

How Long Does a Tenant Stay?
(Or, more Importantly, what factors influence how long a tenant will stay in your property?)

Well to start with, if you are wondering this, you are not alone. Really, this the core question at the heart of real estate investing, property management, ROI and more.

If you can’t get a tenant to stay, you are paying your own mortgage, completing large scale repairs (generally) and ultimately, your asset is not providing cash flow, but costing it.

If you can achieve long term tenancies consistently, you are making more money, saving significantly on expenses and, importantly, drastically reducing the headaches and friction of real estate investing.

So, how long does a Tenant stay?

A quick google search will tell you that for a single-family rental in the United States, you should expect an average tenancy to last about 3 years. And a multi-family/apartment should stay occupied for roughly 2.5 years.

So now you have a benchmark by which to judge your performance.

But, more importantly, how do you influence these averages into your favor?

Within our business, we generally consider 3 factors:

  1. Price of the Unit
  2. Quality of Maintenance
  3. Quality of Management

Let’s dive into each of these 3 things to explain the thought process behind them.

1. Price of the Unit.

This one is pretty obvious, but it bears some further explanation.

Quite simply, if your rental price is low, people want to stay—clear value economics. They save money living in your home vs the house next door and therefore are incentivized to and generally will stay.

But, low rent is at odds with the landlords goal of making the most money right?

It is counter intuitive, but highest rent rarely means highest earnings for the owner over the long term.

Now, you shouldn’t be way below market rates, but keeping a small cushion—5% or so between your price and the price they could get elsewhere will be a strong motivator for the tenant to stay.

It is expensive to move. It is difficult to move. Overall, moving is a pain in the butt.

So, if someone is saving money living in your home, and moving is moving, they have every reason in the world to want to stay.

Now, you’re thinking, but what about my $1200/year that I am missing out on?

Well, if this person stays, you are avoiding a turnover. Turnovers are expensive.

So, if you look back after 10 years and you only had 2 turnovers vs 4 turnovers because you charged 5% under market rate rents you will be far better off financially, not to mention in terms of the qualitative aspects of owning a rental.

I will spare you the really complicated explanation, but assume a turnover will cost you $7000 including vacancy costs.

4 turnovers will cost you $28,000 over 10 years.

2 turnovers will cost you $14,000 over 10 years—and your 5% rent reduction will cost you $12,000.

$12,000 + $14,000 = $26,000 over 10 years.

There are further auxiliary benefits as well. You will fill your property faster when there are turnovers, you will be able to get by with lower end finishes…etc

Ultimately, if you price strategically but aggressively, you will achieve longer term tenants, avoid headaches and generally make better returns.

The second influencer to get tenants to stay:

2. Quality of Maintenance

This one ties in importantly to item 1.

In depth, first, the quality of maintenance and second, the finishes need to be commensurate with the rent charged (or even slightly better) to make someone feel they are getting good value for their money.

First, obviously, your property needs to meet all minimum safety and habitability guidelines—That is a deeper item for a different time, but ultimately, if you are a “slum lord” and tenants do not have access to the bare minimum requirements for peaceful enjoyment of their home, they will be quick to leave.

Assuming that “bare minimum” box is checked, you can turn your attention to quality of finishes and general maintenance.

First and foremost, the finishes should be commensurate with the price you are asking for rent.

Now, the neighborhood and local comparable are hugely important in the decision making here.

Is your home in a low income area? A high income area?

The answer to those questions matter a lot. In a low income area, old (but clean) carpet, laminate counter tops, low-end appliances…etc are all perfectly fine and generally commensurate with market expectations—especially if you price it aggressively.

To a family with low income, stable housing is far more important that high end finishes generally speaking.

But, in a high income area, the quality of finishes will be a major determinant in desirability and you are going to have a tenant pool less resistant to moving if necessary to find a home that they feel is “worth their money” as well as greater disposable income to pay for what they really want compared to just what they need.

But, as a layer deeper than just the quality of finishes, you need to perform quality maintenance.

What this means is, when there is a problem, you need to actually solve it, not just paper it over for repeated headaches for your tenant.

Imagine you have a sewer main that needs repair or replacement.

The tenant’s toilet gets stopped up and overflows. They call you and you send out a plumber to get the drain snaked.

It solves the problem… for now.

An overflowing toilet is frustrating, but not the end of the world for the tenant. It happens.

But, because you don’t want to spend $4500 on the new sewer main, the toilet overflows again 3 weeks later.

You get it snaked again.

Repeat that another 4 times over the next 6 months.

How does your Tenant feel? How would you feel?

Frustrated. And probably ready to leave. They are probably tired of cleaning sewage out of the bathroom and running out to the water shut off at 1 am when their 7 year old uses the bathroom in the middle of the night.

And rightly so.

In short, doing maintenance properly (and timely) is hugely important to keeping good tenants for the long term.

Now, I am not advocating that you perform all requested work all the time.

But you need to be vigilant to take care of items that may seem inconsequential to you, but frustrating to your tenants.

The more you focus on putting yourself in their shoes, and attempt to be reasonable to their demands, the better.

Ultimately, it is a judgement call—how nice should your finishes be? What work should you be doing every time the tenant calls?

The short answer is less is more. And, always select based on durability.

You may not want to pay $500 more for the longer lasting floors today.

Or, $4500 for the sewer mainline repair, as much as keeping dollars in your pocket is important, remember that these are investments and this is an investment property.

You have to feed the cash cow from time to time.

And accordingly, you should plan to invest in your relationship with your tenants.

You may not want to spend $300 for new blinds when you just replaced them 2 years ago.

But, if your tenants pay on time and are easy to work with, and (especially if it is a reasonable request, for example) if the wife is tired of not being able to close the blinds when she is changing in the bedroom—it is probably worth it to cough up the money and the $300 will have a big impact on their longevity.

Which brings us to Point Number 3: Quality Management.

When we say that, what do we mean?

It is generally a mix of a few things: responsiveness, ease of use, and what I call “parenting.”

Responsiveness ties in closely to quality of maintenance—when there is an issue, the tenants need to be able to get ahold of you.

And, they need to see action being taken.

That doesn’t mean that they expect the problem to be solved immediately or ever, but the owner or manager is basically the Tenant’s account representative for the property.

They want to know that you are listening, caring and offering either support or an explanation as decisions are made.

Next, “Ease of Use:” It needs to be easy to live in your home.

An obvious example of this is the rent payments. For example, you require they pay you via wire transfer on the 27th of every month, they are probably going to be frustrated.

Especially when their sister is one of our tenants and can pay online via direct deposit for no cost on auto-withdraw every month.

Make it easy to do business with you.

Another example: be respectful of their privacy. I see a lot of owners trying to make things really easy for their tenants, who end up being at the property a ton, cutting the grass, or doing frequent inspections to “nip any problems in the bud.”

The tenants want the use of their home without the owner poking around too much. Your heart may be in the right place, but give them the freedom to make the property their home.

Make it easy to live there.

Consider letting them plant a garden, or paint the bathroom. These little things turn your house into their home and make them want to stay.

So, remove the difficulties from your management structure—put yourself in their shoes: if you would be annoyed following your own instructions, change your instructions.

And then, give them space to enjoy the property (within reason of course). Be respectful and allow them to turn it into their home.

Finally, the “parenting” aspect of management. This one is purely qualitative.

Basically, what I mean is you need to be the parent and the tenants are your quasi-children.

You need to be firm but caring.

If they are asking for something unreasonable, tell them that and explain why.

If you are uncomfortable with something, but it makes sense from their point of view, that doesn’t mean it is wrong.

You need to give them the benefit of the doubt some and focus on a long-term positive relationship.

Sometime, that means saying yes and other times that means saying no.

You want to provide freedom, but supervision.

Ultimately, they are literally living under your roof. And whether you want(ed) your real kids out of the house as fast as possible, you want these quasi-children to stay as long as possible.

So, focus on providing proper guidance and expectations throughout the experience.

Hold them accountable and yourself equally so.

Okay, so there you have it, the 3 keys to getting a tenant to stay long term:

  1. Price the unit aggressively to incentivize them to stay.
  2. Provide Quality Maintenance (and finishes)—take care of problems to avoid unnecessary disturbances and have the quality of finishes in the home commensurate with the price of rent.
  3. Provide Quality Management—Be Responsive, Make your home easy to live in and your rules easy to follow, and be a good parent.

Thank you for making it this far. I know I threw a lot at you. If you are struggling with some decisions mentioned here, or about to start looking for a tenant and want some advice or some help, never hesitate to reach out.

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Check Rosette Top Subject:
Finding & Screening Tenants
  • Posts 255
  • Votes 262

Jen R.
Investor from Tallmadge, OH

replied about 2 years ago

While I don’t disagree with all of your points, I couldn’t get beyond your $7,000 estimate for a turnover cost. My tenants stay on average 2-3 years, and without looking through my records and doing the math, I would estimate the average turnover to be between $500-$1k, including vacancy costs. My last turnover cost me a week of vacancy and about $200 in repairs/cleaning; the previous turnover cost me 1 day of vacancy and about $500 (a family with 4 kids had moved out after being there for 4 years, so there was a bit of painting to do and some other minor damage).

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  • Votes 1

Alaina Lindquist
Real Estate Agent from San Diego, CA

replied about 2 years ago

@Jen R. Obviously not all turn overs at $7000. They are different in cost depending on where you live as well and what needs to be done. I have had turn overs cost $360 total in repairs and cleaning. The $7000 was just an example and probably the highest you would see a turn over if everything needed to be done. 

Thank you for the comment! That is fantastic if you keep your turn over costs plus vacancy costs low. 

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Check Rosette Top Subjects:
Traditional Financing, Managing Tenants, and Flipping
  • Posts 7.7K
  • Votes 7.8K

Caleb Heimsoth
Rental Property Investor from Durham, NC

replied about 2 years ago

@Alaina Lindquist I’d say average tenant stays 2-3 years. Average turnover just varies. I’d say 1000-1500.

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Thomas S.

replied about 2 years ago

Price , quality and management generally have very little to do with how long a tenant will stay. Assuming all three are in a average acceptable zone. Tenants move primarily due to personal life issues, job, relationship, moving up etc.

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Check Rosette Top Subject:
Maintenance
  • Posts 2.5K
  • Votes 2.9K

Bill Brandt
Investor from Las Vegas, NV

replied about 2 years ago

I’m sure Thomas is kidding,.  Try not responding to repair requests (management) or jacking the rent 20% even if it’s still in the average rent range (price), and any of 100 items regarding quality, they will all get the tenant to move.

I'm only dealing with SFR so your mileage may vary but 4-10 years with a $800-$2500 turnover. (Did the carpet survive, are the appliances still acceptable move-in condition, misc wear and tear)

I start most tenant with a year lease and if they work out the new walls are 2-4 years usually at a time. We get mostly families with kids that don’t want to disrupt their lives with moves.

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Check Rosette Top Subject:
Finding & Screening Tenants
  • Posts 255
  • Votes 262

Jen R.
Investor from Tallmadge, OH

replied about 2 years ago

I actually tend to agree with Thomas, as he does clarify that all of those aspects should be in the acceptable range. Obviously you will drive people out by not taking care of routine maintenance requests or raising the rent beyond market rates. But, assuming you are doing a decent job in those areas, I think the other reasons are much more likely to be the causes of tenant moves. I think I do extremely well in all those areas (charging a fair rent, maintaining a quality property, and treating tenants well), and we still turnover units on average every 2-3 years. I can only think of one tenant that moved out to rent another similar home in the same area (and it’s because we were about to file for eviction on them...). Otherwise our tenants move for job changes, marriage/divorce, purchasing homes, etc. I guess the point being that increasing the average tenant stay is not that simple. Personally I think it has much more to do with the demographics of your rental area. We invest in high quality rentals that attract a more professional clientele; that tenant class is going to be more transient than others as they typically are only renting as a stop-gap.

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