A successful investment in a rental property would require the consistent inrush of the right tenant or resident with a minimum tenant turnover. My reference to a tenant as a resident is intentional, it is possible for a property manager to create a situation for a tenant that makes the tenant feel like the rental property is their actual home. This is a remarkable shift in perspective especially when a tenant regards themselves as a resident rather than just a renter. It is worth noting that this doesn't come about out of the blue; a property manager's approach and how they treat a tenant influences the perception a tenant has of them, and as a result, it creates a shift in perspective. While it’s an impossible outcome to have zero tenant turnover, an in-depth understanding of the components of tenant turnover and the key factors that influence and impact it will enable a property owner to maximize a rental property’s performance.
Owning a rental property is a tough job and finding the right tenants can be a herculean task. It’s a truck load of work and sometimes it never feels like there’s enough time to do that work. However, with the help of a crackerjack property manager you can bid good riddance to the hellish days when you wrecked your brain and depleted your energy levels to get the job done.
If you want to make as much money as possible whilst managing a rental property, you need to make sure that your turn over rate is in check. Vacancies in rental properties are open windows for losses and these losses can have a negative bearing on your overall profit margin. The Turnover rate is an important factor in determinig the bottom line of your rental property. When you find a new tenant, there is a reasonable amount of money that's injected into the property to ensure that the property is suitable and aesthethically pleasing to the incoming tenant.
As a property owner it is important to understand the average turnover rate, how it can affect your business, and the measures you can take to balance turnover costs. In this article we will share a few solutions on how to lower your turnover rate so that you can make the most out of your property.
How To Lower Your Turnover Rate
An effective way to lower a high turn over rate is to look for ways to lower the turnover costs. This will depend on the type pf property you own or manage, and a number of ways have been proven to be useful. Fortunately, this can be done in a number of different ways.
Choose reliable and credible tenants
There's a higher possibility for relable tenants to keep the property in good condition, this will come in handy because it will lower your turn over costs and fewer repairs will be needed. More so, a scrutinous selection of tenants that will stay for a longer period of time( 2- 3years) will significantly reduce your associated costs and turnover rate.
Make improvements on your leases
There are situations that are unavoidable, people will definitely
#1: Screen Your Tenants
The first and most important thing that you need to do in order to decrease your apartment turnover rate is to improve your tenant screening process. You can do this by getting help from a reliable tenant screening service that can help you learn how to recognize the best in applicants.
#2: Improve Your Leases
In some cases, people will inevitably move out of your properties. And that’s okay! It wouldn’t be the rental business if you didn’t have tenants leaving now and then, so you should be prepared to handle any associated move-out costs.
Be sure that your leases include clear terms about move-out cleaning fees, security deposits, damages, and any other areas that could cost you more money. By including such information in the lease, you’ll be helping yourself. The tenant will be more likely to return the property in good condition when they are informed, and that will save you money in the turnover.
#3: Relationships & Renewals
Finally, building up a positive relationship with your tenants will make them more likely to want to stay in the property. When tenants trust you as a landlord and believe that you keep their best interest in mind, they’ll find your property more like a home than ever before.
You can also keep an open conversation with them about renewals. Try including regular renewal conversations and lower administrative rates for those that renew their leases as part of your management process. This can help to keep tenants staying longer than before.
Apartment Turnover: Managing The Inevitable
When considering the average apartment turnover rate versus your own, remember that apartment turnover costs are inevitable. Even if you manage to lower your rates, you will still have tenants moving out from time to time.
The key thing that you need to do when it comes to turnover rates is to manage your expectations:
Figure out what your average tenant turnover rate is
Calculate how much each turnover tends to cost you
Budget this amount into your bottom line
When you have your finances in regard to turnovers in line, those vacancy periods will become less of a problem and more of an opportunity!
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Knowledge of the Costs of Tenant Turnover is important
Hours Invested
The time needed to invest includes the time to clean the property and repair any damage made by the previous tenant. You can’t list the property until these items are checked off your to-do list.
After that, you need to post the property listing, which may or may not cost a posting fee. You need to set up showings and then show the property. You have to process applications to make sure the applicants can afford the monthly rent and have good credit.
All that takes a lot of time.
Money Lost
In addition to the money that you spend on cleaning supplies, repairs, and background checks, you’re also going to have to pay the mortgage and any HOA dues that you might have.
My Smart Moves conservatively estimates the total cost of tenant turnover at $1,750 per month and that’s assuming $950 per month in mortgage and $300 per month in HOA dues.
How to Lower Tenant Turnover
That’s why the best plan for any rental property is to find someone who will pay the rent on time and stay for the long-term. While that’s easier said than done, there are things you can do to make it easier for a tenant to re-up her lease.
Respond Quickly to Tenants and Take Action
A tenant wants to feel like he matters, so it’s important to show him respect. Don’t go longer than 24 hours to respond to a text, phone call or email from your tenant. Make yourself available to hear any concerns and then act. If a tenant complains about a leaking faucet for a month and nothing is done, he’s likely to leave once the lease is up.
If you like the tenant, it’s important that you respond quickly to his concerns and take appropriate action.
Get to Know Your Tenant
Be friendly with your tenant. If they call, ask them how their kids are doing or their dog. Let him know what think of him as something more than just a monthly rent check.
Avoid Large Increases in Rent
Understandably, you might want to increase the rent every year, but you also want to look at the situation from the tenant’s perspective. It’s important to know whether that rent increase is going to be something the tenant can afford or if it’s going to force him to look for somewhere else to live.
Ask in Advance
Ask a tenant three months in advance if she wants to renew her lease and mention any rent increases when you do. Asking in advance gives you and her plenty of time to make plans. If she signs, perfect. If she doesn’t, now you’re not scrambling to fill the vacancy at the last minute.
Offer Incentives for Signing Longer Leases
If you like your tenant and you want her to stick around, offer an incentive for signing a two or three-year lease. Something like free Wi-Fi or a small discount on the rent can go a long way toward keeping a tenant long term.
Maintain the Property
One of the best ways to keep a tenant around is to let her know that the property is well taken care of. If you have a yard, make sure that you’re paying for a landscaper, so it continues to look good. Pay to pressure wash the outside of the home or make sure that your HOA is providing that service. Keep your property looking clean and well-kept and you’re likely to keep your tenant longer.
