We are on our 3rd property and out 6th set of tenants. Summary Question: What is considered a good vacancy duration, and what is considered good tenant duration?
For us, the last two vacancies were 1 day and 1 month. I think the 1 day is incredible and we got stellar tenants on that one. The one month I think is good but I don't know what others are doing.
Our longest tenant has been 3.5 years, Air Force. Shortest tenant was 9 months, but we bought that property with them in it. 3 and a half years is good I think for Air Force tenants. We own in a base town and like base tenants.
How would you complete these sentence:
"You are doing good if you can get your houses rented in XXXXX days/months" -assuming normal qualifying tenants
"You are doing good if your tenants stay for at least XXXXXXX months/years"
Thanks so much!
This is a great question and more people should be asking this since turnover is the largest expense for multifamily landlords.
I like to compare my turnover against other similar properties in our portfolio. The goal is to keep the tenant in the unit for 24 months; if this is achieved we are successful at finding good tenants and managing them. Anything over 24 months is a bonus.
If you have smaller properties, I would shoot for less than 30 days from the last tenant to the new tenant. This can be less if you are showing the property when the old tenant is still in the unit. We do not do this but our downtime is usually 3-4 weeks. If you have onsite management for your large complex, your make ready time will/should be shorter.
Lastly, it is difficult to measure your KPIs with inherited tenants since you did not vet them and did not rent to them.
@Cali Skier Depends on the type of property. MFH (Apartments) are higher turnover than SFM. All my budgets include vacancy rates, so the number I must beat, is my budget.
You are doing great if you have a line of qualified people waiting to rent and, a 2 to 3 day make ready. However, that's not always reality. So, we try to control what we can by having product ready for showing as soon as possible, and being proactive with listings, we require a 60-day notes.
If you have long term tenants, 3 + years, you may want to run rent comps (you should be doing this annually anyway) you may be too low on rents :). However, who does not like a long-term tenant? I agree with @Charles Carillo , we like to keep tenants in our SFH for a minimum of 2 years. As for the MFH, I am happy to get 1+ years.
Sounds like the target is 24 month or longer lease and 1 month or less turnover time for a SFH.
I was very proud of the 1 day turn on one of the properties, could not have been easier. We actually gave the old tenants $100 bonus when they left we were so happy with them. They actually improved the property while in it and left it so we had to do nothing for the new tenants to come in.
"You are doing good if you can get your houses rented in 15 days" -assuming normal qualifying tenants
"You are doing good if your tenants stay for at 2 years"
The one that went in a month, their lease was month to month and we rented to them, holding the property for a month while we replaced the floors. We really held it for 2 weeks because the floors took 2 weeks to replace. They were the second set of potential tenants that looked at it.
I think 15 days is great.
Do you show the property to tenants when the old tenants are still in it?
It depends on the type of rentals and sometimes when the vacancy occurs. With student rentals, you may have a higher turnover. For me, I like ones that stay longer as long as you can keep the rent close to market value.
It used to take me about 2-3 weeks to fill a unit. Lately it's 1 week. A couple weeks ago I ran an add for 26 hours and pulled it. Several great possible tenants. New tenants moved in in less than a week. For me 1 bd stay for about 1 year, 2 bd 2 yr, 3 bd 3 yr+. And I haven't had to do any cleaning or repairs from the ones that move out.
Anything more than 1 year beats the budget, but I’m probably averaging 2-3 year stays. I have a handful of 5-6 year tenants.
With good tenant relationships I can usually have a place rented to a new tenant before the current one moves out. I usually have 1-2 week economic vacancy on the turns. Sometimes I can get that to zero if the existing tenant agrees to move out a little early.
That's the word of the year, relationships. That is the key to everything.