Is 3 month turnover beteen tenants normal

Rental Property Investor · Sacramento, CA · Member since 2018 · 27 posts · 8 votes

Hey all,

I have and issue filling in my properties. I have (1) 4/plex, (1) single family, and (3) 2/plex in Milwaukee WI, and in all three types we are on average three to four months turnover between tenants. We are using a property manager with plenty of experience because we are not local and it seems like they are doing everything in there power to advertise or promote them. I am wondering if it’s just this market, property manager, or my requirements for tenant approval. Has anybody experienced something similar or is it just me.

The area are in “C” & “B” class neighborhoods.

Thank you in advance for any advice.

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Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

@Arnold B. Guerrero no, 3 months is not normal in Milwaukee. We fill our own vacancies usually within a week or two. If it takes 3 weeks, it is only because I was busy and did not respond to inquiries the right way.

You have 3 elements that determine if a listing is attractive: condition, price and marketing. Everyone will tell you just drop the price, but that is often not the right medicine.

I have seen properties from OOS investors before, that could not get rented and when I went there it was totally obvious, why nobody wants to live there! My dog would have been disgusted! We had to do substantial work before they could be sold. Are you sure about the condition of your properties?

You probably know the old joke: how to run from a bear? You don't have to run faster than the bear, you just have to run faster than your friend.

Well, you are the friend, who does not make it.

There are probably more than 10,000 leases signed in the greater Milwaukee market every month (my guesstimate based on population and home ownership rates), so if yours don't get rented, you have to ask yourself why not mine?

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
Really location specific. Ive got units I can fill in days, and then others that might take a couple months.
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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
7y
@Arnold B. Guerrero no, 3 months is not normal in Milwaukee. We fill our own vacancies usually within a week or two. If it takes 3 weeks, it is only because I was busy and did not respond to inquiries the right way.
You have 3 elements that determine if a listing is attractive: condition, price and marketing. Everyone will tell you just drop the price, but that is often not the right medicine.
I have seen properties from OOS investors before, that could not get rented and when I went there it was totally obvious, why nobody wants to live there! My dog would have been disgusted! We had to do substantial work before they could be sold. Are you sure about the condition of your properties?
You probably know the old joke: how to run from a bear? You don't have to run faster than the bear, you just have to run faster than your friend.
Well, you are the friend, who does not make it.
There are probably more than 10,000 leases signed in the greater Milwaukee market every month (my guesstimate based on population and home ownership rates), so if yours don't get rented, you have to ask yourself why not mine?
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Arnold B. Guerrero
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Rental Property Investor · Sacramento, CA · Member since 2018 · 27 posts · 8 votes
7y
@Marcus Auerbach thank you Marcus, my Property Manager gets them rent ready with her GC or her handy man depending on the work needed to get it rent ready. She then sends me pictures of the completed work (before and after picture) we also dropped the price. Our areas are in Old Town and West Allis. It sounds like I may need another PM or a third party audit my current one.
What would you do? I had another PM set up but he pulled out when I told him the location of my first property in Old Town Milwaukee.
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Byron Hoaglan
West Allis, WI · Member since 2014 · 11 posts · 8 votes
7y
I completly agree with Marcus. I normally have a new tenant with in 2 weeks. Normally there is a one month turn over time between repairs and moving in new tenant. My properties are throughout West Allis and Eastside.
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Emilio Ramirez
Contractor · Denver, CO · Member since 2009 · 399 posts · 166 votes
7y
Arnold. I'm curious. I lived in Milwaukee for most of my life but I can't place Old Town. Where is that? Major crossroads?
Definitely sounds like a third party audit would be in order.
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7y
I had the pleasure LOL of experiencing 9 turnovers this summer. 2 of them had a negative economic vacancy of 3 days, 2 vacant 1 day, 2 1 month and 1 6-weeks due to improvements and a job transfer-in start date.

Granted I'm not in Milwaukee, but that doesn't sound like the problem. Apathy costs, as does the fill-fee. You will be out 4 months (33%) rent on this.

Most PMs cost closer to 16% per year than 10%. Just a reminder to underwrite properly when OOS.
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Glidden Rivera
Rental Property Investor · Orlando, FL · Member since 2019 · 105 posts · 71 votes
7y
@Arnold B. Guerrero
Get new management!
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Arwen Lothlorien
Rental Property Investor · West Coast · Member since 2019 · 13 posts · 7 votes
7y
Instead of a 3rd party audit, why not jump on a plane and go out for a long weekend. You can see your places and tour other available units in the area for comparison. Nothing quite like getting your own perspective.
3 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
7y
@Account Closed

What's up with Milwaukee, Merritt? What do you think is most likely the holdup? Do you get these kinds of delays?
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Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
7y
I am curious where old town, Milwaukee is too? What's the zip code?
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Mark Fries
Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
7y
@Steve Vaughan
You have echoed the most overlooked item...PM's are at 15-20%...once you add in things like this plus hidden fees...10% is a fantasy....
6 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
@Mark Fries
Mark nailed it . I know OOS folks have no choice but the fact is No one will look after your property better than you will . When I have a vacancy it’s GO time . I pour it on and do whatever to get that sucker filled quick . These pms I read about on here lack initiative and don’t have much vested interest in . They aren’t losing 25 bucks a day like you .
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Mark Fries
Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
7y
@Dennis M.
2-3 days before I am meeting the police for an eviction, that house is listed for rent...literally meeting the new tenant as the other is getting forcibly removed by the police...one time I even left the previous tenants furniture and TV inside for the new tenant...and she is still there...great tenant and pays on time...
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Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Originally posted by @Mark Fries:
@Dennis M.
2-3 days before I am meeting the police for an eviction, that house is listed for rent...literally meeting the new tenant as the other is getting forcibly removed by the police...one time I even left the previous tenants furniture and TV inside for the new tenant...and she is still there...great tenant and pays on time...

Ha ha that’s great man !
“ welcome to your new house folks , good news it’s furnished too ! pay no attention to the guy being led out by the police .”
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Judy Parker
Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
7y
I have property in Bergen County, NJ and Rockland County, NY.

My NJ SFR vacancy took 2 months to fill (with numerous price reductions). Then, at the end of August TWO appkucants both decided, simultaneously, that they wanted the house!

My NY 1 BR unit, overlooking the Hudson River, has been vacant since July 1st. Had 6 or 7 lease applications, three of which I rejected and the other three did disappearing acts. So I keep adjusting the price downwards as I don't want a vacancy in the winter.
Both units charge a Realtor Fee.

Moving forward!
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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
7y
Originally posted by @Arnold B. Guerrero:
@Marcus Auerbach thank you Marcus, my Property Manager gets them rent ready with her GC or her handy man depending on the work needed to get it rent ready. She then sends me pictures of the completed work (before and after picture) we also dropped the price. Our areas are in Old Town and West Allis. It sounds like I may need another PM or a third party audit my current one.
What would you do? I had another PM set up but he pulled out when I told him the location of my first property in Old Town Milwaukee.

I would fly to Milwaukee, probably unanounced to my PM, take a look at the units personally. Look at the competition and interview a few PM's. West Allis should not be an issue to get a PM, but the Old Town Property (?) seems to be in a part of town, where good PM's don't want to operate.. I'll send you a PM with some names.
General note: the rental market in Milwaukee looks like a typical bellcurve distribution. You have sub-standard and low in come on the left, then it rises up to functional tenants, at the median point you have lifestyle tenenats and then it drops down to luxuty and ultra luxury with very low volumes.
Functional tenants are those who just need certain functions for the cheapest amount, lets say 3 bedrooms and a garage. Lifestyle tenants are willing to pay more than fair market rent, because of the lifestyle the unit provides. These two provide the bulk of the market and they are around the median, it slopes down left and right.
As on OOS investor, you typically should stay around the median, perhaps a little to the right. The rents are much higher, the tenants much easier to work with. If you go to the left, rents get lower and drama goes up - which makes it hard for a PM to handle, more work, for less money.

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
You can rent anything in just about any market if it's priced appropriately. If you're taking more than a month to rent something, you are doing something wrong. And if you're taking more than a month for most of your rentals, most of the time, then you need a different PM!
Let's say your house rents for $1,000 a month. That's $12,000 a year which means you are losing $3,000 or 25% when it sits vacant for 90 days. It's actually more if you have to pay utilities and mow the lawn. Then there's the increased risk of a break-in or damage to the home, particularly during the winter months.
Instead of losing $3,000 a year, drop your rent to $900 and only lose $1,200 over the course of a year. Drop the rent rate to $800 and you'll lose $2,400 which is still $600 less than sitting empty (plus utilities and other expenses).
First, you need to figure out how to price your homes so they're more competitive in the market. Whether you are renting a Class B single-family or a Class D apartment in the 'hood, it will rent if the price is right. Your PM should be doing this for you and your PM should be answering this question for you, particularly if it happens regularly.
Develop a system. Market your property at $1,000 a month for two weeks. If there are no takers, drop the price $50 - $100 and try again. After two more weeks, drop it again.
Most important: start at a competitive price!
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Arnold B. Guerrero
OP
Rental Property Investor · Sacramento, CA · Member since 2018 · 27 posts · 8 votes
7y
@Emilio Ramirez Sorry, I meant, old down town. At least that’s what I was told. Is between highway I-794 and I-42. On both sides actually of I-794 or I guess is west Milwaukee.
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Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
7y
we like to transition our tenants as one is leaving the other is pulling in the driveway.
& it has worked for both our high end SFR & multi units. School district is in demand & the C-class units are well priced yet still return us healthy double digit COC. The only time we have any down time is a planned rehab but that entails a subsequent rent increase of $225-$325/month. In 2014 I was installing new kitchen cabinets in one of our 6-plex units. It rented 'as is' for $725/month before the work was completed as they needed proof of residence for the school year sign-up. Jan 2019 my daughter rented it to a new couple for $975/month, but we did throw in a (scratch & dent) stackable washer dryer I picked up at Lowes for $600.
1 Reply
Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
7y
3 month turnover is pretty high for Milwaukee. I would look into the time frame of how long it is taken the PM to get the unit rent-ready. Getting the unit rent ready and up for rent quick is the key.
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Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
7y
I have never heard of Old Town Milwaukee or any neighborhood described as that. If the properties are in West Milwaukee or West Allis, reach out to @Matt Maurice at Welcome Home Milwaukee (formerly REIS property management). He is a property manager/investor and is very familiar with that area.
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Dennis Schramer
Property Manager · Milwaukee, WI · Member since 2016 · 15 posts · 14 votes
7y
Have you had a conversation with your PM to see what she thinks the problem is?
There is always a reason, whether it's the price, condition of the premises, or her not able to handle showings effectively.
If you've used her for a while, try to see from the manager's perspective otherwise find someone new.
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Arnold B. Guerrero
OP
Rental Property Investor · Sacramento, CA · Member since 2018 · 27 posts · 8 votes
7y
@Rebecca Knox thank you Rebecca. The properties are in West Allis and West Milwaukee.
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Account Closed
Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
7y
Originally posted by @Jim K.:
@Account Closed

What's up with Milwaukee, Merritt? What do you think is most likely the holdup? Do you get these kinds of delays?

Milwaukee is just fine, as ever.
I count on a minimum two month vacancy between tenants. In fact, I calculate my vacancy rate projections based on that. I know plenty of landlords rent to one the next day after the other, but that just doesn't align with my strategy of screening for and obtaining the best possible tenants on the front end, so I can reduce the chance of dealing with a bad tenant on the back-end, which I believe is more costly.
The red flags to me are 1) an out of state investor who 2) relies on a property manager. I suggest out of state investors seek local equity partners instead of hiring managers. Having someone local to truly trust will yield the best chance their interests are served. A property manager that makes money and loses nothing when things go wrong is not exactly an ideal set-up...IMO of course...lol. I dunno...call me crazy.
West Allis and West Milwaukee are basically just Milwaukee as far as most people are concerned, and the urban areas of the metro are spotty. That said, the rough areas rent too. Probably asking too much for what it is and/or the screening criteria are too stringent for what it is.

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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
7y
@Account Closed
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