Turnover rate? % of tenants that don't get back their deposit?

Question

I'm curious to know for my business model.  What is your turnover rate and the percentage of tenants that leave damages to cause you to not return all of the security deposit?

Christine Kankowski · Answer

We dont keep track of what percentage money we deduct...  But most often it is deducted for cleaning or leaving large items for us to dispose of.   The money deducted is used for the repairs or cleaning, so it doesn't factor into profits.

Jennifer T. · Answer

I primarily have duplexes in C+ neighborhoods (safe, but lower middle/middle class).  My security deposits are usually either all/almost all or nothing.  Unfortunately, when it's "nothing", that has always meant I took someone to eviction court or they moved out voluntarily because they didn't have the rent.  Which also means I'm typically out over $1,000 because they didn't pay at least the last month's rent and damaged or stole things.

I have seen a HUGE correlation between people who have problems paying the rent and people who cause damage, due to their negligence/carelessness.  And vice versa.  Tenants that are up to date on their rent when they move out get all or most of the security deposit back, because they return the home to me in great condition.

I've only had more than one rental for 5 years, so that will affect my average vacancy rate.  I'd say my vacancy rate is all over the place, but probably averages about 18-24 months.

Debbie C. · Answer

@ Calvin Brock

We have SFR in B to B+ areas. We turn them over on average every 2-3 years.

Most tenants get all to almost all of the refundable deposit back. We charge a non-refundable amount for cleaning. I do very detailed move in and move out inspections, plus every 6 months they are inspected. This has worked well for me.

We used to have SFR in C to C- areas and that was a different story. Much more turnover and more issues with the condition of the property when they left. As mentioned above, items left behind, more to clean, sometimes more damage. Some left owing rent so I would say most of those had some amount deducted to losing all of the deposit.

Hope that helps.

Debbie

Sheldon Zimmerman · Answer

Good Afternoon,

Unfortunately, that is a number we do not track either. I would lean towards it being higher in rougher areas than in high-end rentals. But it does depend on the tenant. I would say me personally in the last year I had 1 out of 22 rentals that did a total trash out on the property where they did damage to it. So it is rare you have a total trash out. But you will have things tenants leave behind or don't clean the house after they move out. So we end up charging a small amount to do that repair.

Michael Peters · Answer

For me I would say 1/6 get their deposit fully refunded.  About 1/10 do not receive anything back from their deposit.  This isn't necessarily because the place was trashed but damaging a few time consuming items can add up fast.  Those in the middle have about 25-33% of their deposit withheld.

Calvin Ozanick · Answer

Good morning,

In my experience, I have had 3 units in the past 3 years become total trash outs. This is bound to happen at some point and we have had 183 tenants in my time managing these 50 units and they have grown to roughly 150 now. So you are looking at less than 2% of the time that you are required to use the entire deposit to fix damages. Obviously, that tends to change as you shift markets, neighborhoods and tenants. However, I feel that is a pretty good percentage.

Calvin Brock · Answer

Overalll, looks like 28% of your terminated leases didn’t get their deposit back.  6 of 21 tenants didn’t get deposit returned fully.  Thanks Silvia.  Your info is what I needed.

Sylvia B. · Answer

Well, now, the best answer I have is, "it depends."

Since we began investing in SFRs 8 years ago, we have owned 14 houses, all in the same small town. They all have different circumstances.

• 2/1 rented to one older couple for 2.5 years until we sold the house. Bought out the remainder of the lease.
• 3/1 bought in 2012 is still rented to the original tenant.
• 4/2.5 bought in 2013. 1st tenant rented 2 years, got their whole deposit back, 2nd tenant still there.
• Very small 2/1 bought 2014. 5th tenant just moved in. All previous tenants got most of deposit back.
• 3/1 bought in 2014. 1st tenant got 100% back, 2nd tenant 0, 3rd got a little back. 4th moved in Mar 1 this year.
• 4/2 bought in 2014. 1st tenant moved out June 30th, still owes about $100 for damages that exceeded deposit. 2nd tenant is the county sheriff, who expects to be there about 2 years while his house is being built.
• 3/1 bought in 2014. This one is currently for sale because we can't seem to keep tenants in it long term. We've had 7 different tenants in this one, 5 of whom left because they bought a house. We kept the full deposit on one, the rest got all or most back.
• Large 3/2 on 1 acre lot, bought in 2015. The 1st tenant stayed one year, left a broken window and lots of dirt. They got nothing back. The 2nd tenant is still there.
• 3/1.5 bought in 2016. 2 tenants in the first 2 years, both bought houses, both got their deposit back. Current tenant recently renewed for a third year.
• Large 3/2.5 bought in late 2016. 1st tenant stayed 1.5 years while building a house, got their whole deposit back. 2nd tenant is our preacher & family. We expect them to be there 5 to 10 years.
• 3/1.5 bought in 2017. 1st tenant inherited older couple, no deposit, left it it good shape. 2nd tenant just moved in March 1st.
• 4/2 bought late 2017. 1st tenant moved out in February and left a lot of damage. We billed them a little over $1100 for damages above their deposit, but we'll never collect. 2nd tenant expects to rent long term, or may buy the house from us.
• 3/2 bought early last year still has it's original tenant.
• 3/1.5 bought in June is a full gut job. We don't expect to have it ready to rent until next summer.

Calvin Brock · Answer

Great info Jennifer!  Thanks

Calvin Brock · Answer

Thank Debbie.  Your info is useful.

Turnover rate? % of tenants that don't get back their deposit?

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