If you own rental properties, profit is the goal. A large component of managing your rental properties is maximizing your occupancy, minimizing your vacancy and perfecting your turnover.
What exactly is tenant turnover?
One of the most pain-inducing periods of property investment is called turnover. This includes getting your tenant to move out on time, making sure the property is clean and in good condition for its next set of tenants by restoring it completely to its original state and then marketing your lovely property to find other people who want to rent it too while working diligently on leasing it as quickly as possible. The point being that if you handle this process incorrectly, it can make or break your bottom-line on a given deal.
The longer it takes to make your rental property move in ready and the longer your rental property sits vacant, the less money in your pocket. Efficiency is key.
How to plan for tenant turnover?
It is best to be as prepared as possible when it comes to your tenants move outs. To plan accordingly, you can send a notice 60 or 30 days prior to the lease end date asking your tenants if they plan on renewing their lease or vacating your rental home at the duration of their lease agreement. You should have a clause in your lease agreement noting it is required that your tenants provide a notice a designated amount of days ahead of time when not renewing their lease.
Knowing sooner than later if and when your property will be vacated gives you more time to plan for the turnover process and market to get a new renter in.
How long does it take to find new rental property tenants?
There are so many variables when it comes to finding new rental property tenants. This includes the season, location, home type and how you market it. If you have a sudden move out / lease break in the colder months it might be a touch more challenging to find a renter for a few reasons, being you had not planned for or scheduled your turnover in advance nor have you been marketing your home as move-in ready. Plus, the colder months are usually the slower months for move ins and move outs. This again is why you should have a lease clause for breaking your lease agreement and moving out early, to ensure your renters are still paying while your rental sits vacant, through the lease termination or breakage fee. This will help keep money in your pocket while you flip and market for a new renter.
What to do when turning over a rental?
Some landlords schedule a time with their renters to do a pre-move out walk through inspection. This helps you get a better understanding of what work will need to be completed upon move out and gives you the advantage of knowing ahead of time to schedule accordingly. This is very helpful if you have a move out during busy season, sometimes contractors can be backed up so getting on their books sooner than later is advantageous. Plus, your tenant will have a better understanding of what is expected of them when it comes to the condition of how they leave their rental home.
The expected move out punch list items often comprise of:
- Carpet / floor cleaning
- Deep cleaning
- Paint touch ups or repainting
- Patching up nail holes
This is also a great time to do any upgrades. Oftentimes upgrades will increase the value of your rental property thus making you more money. Scheduling these upgrades in between renters is great because you are not inconveniencing your renters and you will most likely have other work that needs to be done too, multitasking at its finest.
When your turnover process is complete and your rental home is ready, take some photos! Newer photos always help your vacant properties show better in online listings. Plus, you never want the same stagnant photos to be shown on your property listings.
Schedule your move out walk through sooner than later! During your walk through after your renters are gone, take photos. This cannot be stressed enough, these photos are proof of how your tenants left your rental home and will come in hand if there are any questions when it comes to their returned security deposit amount. You have enough moving parts already during the turnover process, the last thing you want is your previous renters hounding you, asking when they will be getting their security deposit back and for how much.
How much does tenant turnover cost?
Sadly, there is no cookie cutter cost for this. A lot of your turnover cost depends on how your previous renters left your rental home. This is where security deposits come largely into play.
Other important factors are the age of your rental property, the upgrades it has or it needs and the maintenance required. If you know there are items to be addressed during your turnovers you can plan and budget accordingly.
Expenses can add up quickly! Between repairs, upgrades, maintenance, marketing and more, your profit can slowly start to disappear depending on your turnover costs.
Do your homework ahead of time. Having a list and being prepared will save you time, money and stress.
Tenant turnovers are inevitable. Doing your work ahead of time to ensure you are making the most of your time while your rental home is vacant is essential to both your efficiency and your bottom line.
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