October 12, 2017
Reality Bites: The True Cost of Tenant Turnover
In property management circles, some might say that absorbing the expense of tenant turnover is par for the course – it’s simply the cost of doing business. But have you ever stopped to think about just how high that cost can be?
Leaving units vacant is the equivalent of dead air time on television. It’s something to be avoided at all costs.
At the very least, vacancy disrupts your cash flow. And for property management firms that depend on rent to cover mortgage fees, it can make or break a business.
The scary thing is, vacancy isn’t the only expense associated with tenant turnover.
Costing It Out
In addition to vacancy, consider these pricey tenant turnover pitfalls:
Marketing. From online banners to print ads, all advertising costs money. The longer your units are empty, the more you have to pay to keep ads running.
Processing. Screening prospective tenants is time-consuming and therefore resource consuming. Ensuring a positive rental history necessitates running a host of checks, from credit to employment to criminal background.
Administration. You’ll also have to spend time showing the rental unit, sorting through paperwork, and answering calls and emails. The more turnover you have, the more hours you and your team will clock dealing with tenant intakes and departures.
Maintenance. New renters expect to find their unit in good condition. The security deposit from your previous tenants should cover any damages they inflicted, but basic cleaning, repairs and upgrades – like new carpets or repainting – fall on the property manager.
Working the Problem
Of course, some turnover is inevitable. Whether they move out of town or buy their own home, even the best tenants eventually leave.
However, that doesn’t leave property managers helpless. There are steps you can take to minimize tenant turnover, and mitigate (or, in some cases, obliterate) the cost and disruption when moving out is unavoidable.
- Screen, Screen, Screen! When it comes to property management, an ounce of prevention really is worth a pound of cure. It pays, big time, to choose the right tenants – those who are honest, pay rent on time, respect the rules and take care of your property. Be selective in the people you rent to and be clear about their responsibilities as far as maintenance and upkeep. It helps to send automatic reminders or hints about proper care of their unit during each season.
- Build Trusted Relationships. Too often, landlords make the vital mistake of focusing only on tenant recruitment and failing to follow up after the move-in date. Once you find the right tenants, make the effort to keep communication lines open. Use a tenant portal to send out annual e-surveys asking for their feeding. Keep track of residents’ birthdays and send e-greetings on their special day (or even a gift certificate to a local eatery, if you want to go the extra mile). By building strong ties with your tenants, they’ll be more likely to stick around – and, when the time finally comes to move out, to give you enough notice to find new renters and avoid vacancy.
- Be Proactive. Once your tenant gives notice, don’t wait for the move-out date before starting the intake process. Advertise the upcoming vacancy right away, and start accepting new applicants and showing the unit before it’s vacant. It’s also a good idea to conduct the departure walk-through while your existing tenant is still around, so you have time to identify and address any repairs before move-in day – and hopefully keep the number of days vacant to zero.
- Enlist the Right Software Solution. Marketing, leasing, inspection, communication – every step of tenant turnover can be made faster and easier with the right online property management solution in place. By automating and streamlining the process, you’ll save time and money while greatly improving customer satisfaction.
Evicting Tenant Turnover Turmoil: Your Property Management Solution
If you’re looking to optimize rental income by keeping tenant turnover as low as possible, we can help.
Property Vista offers web-based software to help landlords run their properties more efficiently and more effectively. Our solutions include online resident applications and intelligent credit checks, as well as communication and maintenance portals. To learn more, Get a free demo today