How to Reduce Tenant Turnover Costs
No landlord wants to deal with a vacant rental property. Not only do you miss out on monthly rent, but you also have to pay to clean the unit, repair any damage, list and advertise the property, and pay for utilities while it’s unoccupied. As you can imagine–all of these costs add up quickly. Today, we’re going to review why tenant turnover happens, how much it costs, and ways to reduce tenant turnover costs. To learn how you can save on tenant turnover, just keep reading.
Contents of This Article:
- What Is Tenant Turnover?
- Why Does Tenant Turnover Happen?
- How Much Does Tenant Turnover Cost?
- Ways to Reduce Tenant Turnover Costs
- Reduce Tenant Turnover With Property Management
What Is Tenant Turnover?
Tenant turnover is the process of one tenant moving out and a landlord or Fairfax property manager preparing the property for the next occupant. It starts with one tenant moving out of the property for whatever reason. Following this, landlords generally perform a move-out inspection to assess the rental unit’s condition. Then, they must undertake cleaning and repairs to restore the property to its original condition, ensuring it meets the standards for prospective tenants.
From there, landlords must advertise and market the property to attract new renters. This is a crucial process, as good marketing can reduce the time the property is unoccupied. As such, it’s important to utilize various channels to reach a broad audience.
Once prospective tenants start showing interest in the property, evaluating their rental applications and screening them thoroughly is essential. Upon finding a qualified tenant, landlords finalize the lease agreement and conduct a move-in inspection to document the property’s condition before the tenant moves in.
As you can see, the tenant turnover process involves several steps, making it lengthy and time-consuming for landlords, not to mention–expensive. Before we review how much tenant turnover costs, let’s dive into why it happens.
Why Does Tenant Turnover Happen?
Tenant turnover can happen for several reasons. Whether a tenant’s lease expires and they choose to move out or they can no longer afford the rent, you may have to re-market and advertise your property to find new tenants. Here are some of the main reasons for turnovers in rental properties.
Expensive Rent- If a tenant’s rent and utility bills exceed their budget, it may cause them to seek more affordable housing options elsewhere.- Ignored Maintenance Needs- If landlords neglect maintenance or fail to address necessary repair issues promptly, tenants may become dissatisfied and choose to move out and find new housing.
- Lease Contract Expires- When a lease term ends, tenants may decide not to renew for various reasons, whether it’s changes in housing needs or preferences.
- Bad Neighbors- Disruptive or unpleasant neighbors can negatively impact a tenant’s living experience, leading them to find alternative housing arrangements.
- Job Loss or Relocation- Changes in employment status, including job loss or relocation for a new job opportunity, may cause tenants to move to a different location or downsize to more affordable housing.
How Much Does Tenant Turnover Cost?
The cost of tenant turnover can vary depending on several factors, including the location of your property, the type of rental you own, and which expenses you’re responsible for. Here’s a general breakdown of what you might spend each month a rental property goes unoccupied in Northern Virginia.
- Mortgage Payment- $1,919/month
- Property Taxes- $155/month
- Advertising Costs- $35 to $50/month
- Tenant Screening- $50+/month
- Utilities- $430/month
- Cleaning and Maintenance Costs- $120 to $280/month
- Property Manager Fees- $120 to $130/month
In total, leaving rental properties unoccupied can make a major dent in your rental income. For instance, in Northern Virginia, you may spend upwards of $3,014 each month your property is vacant.
Ways to Reduce Tenant Turnover Costs
Tenant turnover costs can be quite significant–especially if you have several vacant rental units. As such, tenants and property managers must implement ways to reduce tenant turnover costs. Here are a few tips to keep your tenants happy and rental properties occupied.
- Keep Rent at a Fair Market Price
- Offer Amenities Renters Want
- Respond to Tenant Requests
- Screen Tenants Thoroughly
- Maintain Your Properties
Keep Rent at a Fair Market Price
No tenant wants to feel like they’re overpaying for rent when they could get a better price elsewhere. If they do, they may leave your property for another cheaper one, leaving you to pay for an unoccupied rental. That said, setting a competitive rate ensures that tenants see the value they’re receiving as worth the cost. Reviewing local rental market trends can help you adjust your rent prices accordingly.
Offer Amenities Renters Want
If there’s no incentive or exciting element keeping renters at your property, they may find a rental with better amenities elsewhere. Providing desirable amenities can make your properties more attractive to tenants and increase their satisfaction, reducing the likelihood of turnover. Some of the top amenities renters look for in a rental property include:
- On-site laundry facilities
- Ample parking
- Fitness centers
- High-speed internet
- Outdoor recreational areas
- Pet-friendly policies
Respond to Tenant Requests
If you don’t respond to tenant requests in a timely manner, they’re going to become frustrated. If it’s a recurring issue, they may be extremely dissatisfied with living in your rental property. Responding to tenant requests for repairs, maintenance, or other concerns shows your commitment to tenant satisfaction. In turn, it can improve the overall rental experience, keeping your tenants from seeking better living opportunities.
Screen Tenants Thoroughly
Without a thorough tenant screening process, you don’t truly know who you’re renting to. Even with a good screening process, tenants who have been great tenants in the past may surprise you and leave you scrambling to find someone to take their place. A thorough screening process helps ensure that you select tenants who are more likely to fulfill their lease obligations and stay for the entire lease term. Background checks, credit checks, rental history verification, and references can give you valuable insights into a tenant’s suitability.
Maintain Your Properties
If you don’t prioritize regular maintenance and repairs in your rental properties, your tenants are almost guaranteed to become frustrated. Nobody wants to live in a rental that needs repairs or maintenance work–especially if it’s prolonged. As such, regular maintenance and upkeep of rentals are crucial for keeping tenants satisfied and minimizing turnover. Well-maintained properties not only attract tenants but also contribute to their overall satisfaction and likelihood of renewing their leases.
Reduce Tenant Turnover With Property Management
Tenant turnover costs can easily cut into your rental property profits. That’s why it’s essential to handle them quickly and efficiently to reduce the amount of time your property is left vacant. With today’s tips, hopefully, you can cut back on tenant turnover costs and ensure your tenants are satisfied, keeping them happy in your rental properties for longer.
If you’re looking for more ways to reduce tenant turnover, consider hiring a comprehensive rental property management team like BMG. Bay Property Management Group can help you market your rentals, screen qualified tenants, maintain your properties, and take care of the turnover process when necessary. So, if you’re looking for ways to simplify your life and cut business costs, contact BMG today!
