Real estate investors are happiest when their properties are occupied and their tenants pay their rent on time. However, some property owners find themselves plagued with high turnover rates.
Rental turnover: is a costly, time-consuming process that should be avoided whenever possible. With vacant units that require maintenance and relisting, property managers and investors alike, quickly find themselves losing capital. Read on to learn how you can protect your bottom line and keep your tenants happy.
What is Rent Turnover?
Rent turnover occurs when, instead of renewing their lease, the current tenants decide to find a new rental property or invest in their own home. This is most common during summer, with 80% of rent turnovers occurring between May and September. While there are countless common reasons residents decide to leave properties, typically it is because they are unsatisfied with their current property due to low maintenance and communication issues.
Rent turnover also applies to the period of time during which the property is empty and no rent can be collected.
Factors Behind Rental Turnover
The best way to decrease the turnover rates of your properties is to understand the common reasons residents decide to terminate their leases and search for new accommodation. Moving house is widely considered to be an incredibly stressful process, with recent surveys revealing that people find moving more taxing than filing for divorce. Your tenants won’t move without good reason.
Over time, life takes everyone in different directions. Whether your tenants have been hired for a role in a different city or have decided to get a mortgage and invest in their own property. There are countless reasons why your property may no longer be suitable for them. Usually this occurs when renters have completed school, or want to move on to a bigger location to start a family.
Unfortunately, this is an unavoidable aspect of property management and has little to do with your behavior as a property manager or the condition of the rental unit.
One of the most commonly cited reasons for rent turnover is poor property maintenance. Whether it’s unfulfilled maintenance requests or a disregard for the rental unit’s annual maintenance needs, long-term tenants will quickly lose patience if the property they are renting is not being properly cared for.
Do not ignore your tenants when they file a maintenance request, and ensure that the maintenance crew you hire is professional and punctual.
As living costs continue to rise, you may have to increase your tenants’ monthly rent payments. Depending on the cost of rent and their employment circumstances, the current resident may no longer be able to afford to rent your property. A sudden increase in rent often leaves residents with no choice but to look for another property.
Before increasing property rent, consider the costs associated with rental turnover and discuss any potential changes with your current residents.
The Cost of Rental Turnover
Before you can rent the property to new tenants, you need to ensure that everything is in pristine condition. Depending on how long your previous tenants have lived in the unit, this process can vary from applying a fresh coat of paint to installing a new bathroom.
It is crucial that you complete a detailed move-out inspection and note any property damage that will need to be paid for from your residents’ security deposit. Creating a detailed move-out checklist for your tenants which includes all of the details regarding the move-out process ensures that everyone knows what is required of them once the rental contract is terminated.
If you want to market a property effectively, you need to invest in professionally curated adverts that will draw in future tenants. While sites such as Craiglist and Zillow can be useful, they are rarely as effective, leaving you with a vacant unit and no incoming rent payments.
Hire a professional cleaning service to clean the property before you photograph it and relist it online. This ensures that it is shown at its best and is subsequently more appealing.
Showing the Property
Once the unit is listed, you will have to take time out of your day to show it to prospective tenants. This is a time-consuming process that takes you away from other property management tasks.
Most potential renters want to complete a thorough inspection of the property, so ensure that you have paid attention to repairs and that the unit meets customer expectations.
How to Avoid Losing Tenants
The best way to increase your renter retention rate is to cultivate good relationships with your tenants. This guarantees that, if any issues arise, you can address them before your residents decide to look for a new rental property.
Create a Maintenance Plan
Make the maintenance process as easy for your residents as possible. When they first move into your property, ensure that they know how to file a maintenance request and that they have a general estimate of how long it will take for the request to be addressed.
Be sure to hire reliable maintenance workers and collect feedback from your tenants.
Screen Potential Tenants
It is crucial that you screen prospective renters to determine if they are the correct fit for your property. With a background and credit check, you can discover if they are reliable and financially able to commit to your property for the long term.
When new residents move in, give them your contact details and check that they know who to contact about repairs and maintenance issues. If they do contact you, try and respond in a timely manner and be transparent about what they can expect.
Work with a Professional Property Maintenance Team:
With a few adjustments to how you communicate with tenants and respond to their concerns, you can see a massive improvement in your renter retention rate and avoid prolonged turnover periods.
Contact the experts at Maximum Property Solutions to get their professional opinion on property management and to fine-tune your rental turnover process.