Owning a rental property is great when things go well. But tenant turnover has a way of messing up the bottom line. Every landlord’s dream is to have great, steady, long-term renters. But tenant turnover is a reality. Turnover rates vary by region and property type but often average 40-70%. Unexpected turnover costs can add up quickly.
A reliable property manager can help minimize turnover cost in many ways. Let’s explore some of those possibilities. It may be time to consider investing in property management to shore up your overall rental property investment.
Clear Cost of Tenant Turnover
When a tenant moves out, income stops flowing in until a new tenant moves in. The loss of rental income is made worse by the expense of preparing the property for the next tenant. The more turnover, the higher your costs.
Let’s break down those costs specifically:
Lost Rental Income
The longer a rental property sits vacant, the longer you go without income from that property. That may seem obvious, but the impact may be overlooked. When you consider annual income from rentals, that number drops when you factor in vacancies.
The length of vacancy is unpredictable and not fully in your control. It depends on variables like necessary repairs and time needed to find a new renter. Your annual rental income, which on paper is a steady amount per month, becomes an uncertainty instead.
Cleaning and Repairs
Turning around a rental property takes time and money for cleaning and repairs. You will need to deep clean for the best upkeep, and your new tenants will expect it. A fresh coat of paint or touch ups might be needed. You’ll have the cost of hiring a cleaning service or the time and supply cost of doing the cleaning yourself.
Repairs could range from fixing minor damages and plumbing issues to replacing appliances. Hopefully, your tenant’s security deposit covers basic repairs. But aged-out appliances will be an added expense for you.
Rental Property Marketing
Advertising online and offline to fill the vacancy will take time and require fees. You may also need to hire a professional photographer or staging service to attract quality tenants. Even in a community with good word-of-mouth, you will need basic listings to stay top of mind and help potential renters find you.
Tenant Screening
You will also have the monetary and time investment of screening potential new tenants. You’ll be running credit, employment, criminal, and rental history checks to vet new tenants. This process requires application fees and screening time on your part.
Indirect Cost of Tenant Turnover
Rental property vacancies include the costs we just considered, along with indirect costs. Let’s look at some of those additional costs:
Property Owner’s Time and Stress
Managing repairs, screening potential tenants, and showing the property take time. You already have a full schedule, and now you have to work all of this in. It’s like having a second job. Add in the stress and distraction from other responsibilities, and you’ll see your vacancy cost rising.
Overlooked Property Damage
With frequent tenant turnover, it’s easy to miss minor repair issues that can become bigger, costlier problems later. Move-outs can be chaotic, especially when you’re already trying to get new tenants in. You don’t have the stability of a long-term tenant who will notice and alert you to issues when they are small enough for a simple repair.
Impact on Property Value
Frequent tenant turnover can lead to wear and tear on the property.
Without the time and effort needed to market the property and screen potential tenants, the property will sit empty for longer.
People notice high turnover and long vacancies. A perfectly good property may earn an undesirable reputation, simply due to the problems associated with tenant turnover and the associated costs.
If you find yourself in this difficult cycle, there is a way out. A property manager might have the solutions you need.
How Property Management Helps Reduce Cost
A property manager can reduce the problems and cost of tenant turnover. Property management can vet the best tenants and stay on top of potential problems, helping to reduce tenant turnover. In the event a tenant leaves, the property manager can market the place quickly and effectively, reducing vacancy time and freeing up your time.
Let’s look at services offered by property managers that help lower the likelihood and cost of tenant turnover:
Preventative Maintenance
A property manager conducts regular inspections to keep the property in top shape and addresses tenant complaints. Happier tenants mean less turnover. Property in good working condition means less downtime in the event of turnover.
Tenant Screening
One of the biggest ways to reduce tenant turnover is to find the best tenants. A property manager can handle the screening process from start to finish, finding tenants who are likely to stay on top of payments and avoid causing damage.
Ensuring Compliance
Effective lease compliance and timely payments are key to reducing tenant turnover. A property manager can handle these processes, including rounding up late payments. In the event of eviction, a property manager can navigate legal issues to reduce property downtime.
Marketing and Re-Leasing
A property manager can handle marketing and leasing, using professional networks, tools, and competitive pricing strategies to find the best renters quickly.
Property managers help landlords save money, time, and stress by managing tenant turnover costs effectively. If the turnover cycle is weighing on you, it may be worth your time and effort to reach out to a property manager who has a good reputation in your locale. Let the property manager know your specific struggles. You’ll be relieved to discover the available solutions.
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Janet Eriksson 