The Cost of Tenant Turnover: It’s Pricier Than You May Think!

The Cost of Tenant Turnover: It’s Pricier Than You May Think!

When managing rental properties, you'll want to avoid tenant turnover because it will make you lose profits. Tenant turnover is the period when a tenant moves out, and your property is prepared for a new tenant. On average, tenant turnover costs $1750 per month. It can be as high as $5,000 depending on several factors.

Read on to learn about the costs associated with tenant turnover and how you can promote resident retention.

Administrative Costs

There are various administrative costs associated with tenant turnover. Examples include paying vendors for cleaning and maintenance work, processing paperwork, settling bank fees, screening new tenants, processing lease agreements for new tenants, and more.

Repairs

If you want to attract long-term residents/tenants, you should make sure your rental property is in its prime condition. Perform a move-out inspection with the previous tenant. If they caused any damages, you can take advantage of their security deposit to shoulder the repairs. Major repairs can prolong the vacancy of your rental property, thus increasing your lost income.

Cleaning

Keeping your property clean is crucial in drawing in great tenants. Otherwise, potential residents will think the landlord doesn’t place much importance on keeping the place clean. In turn, they’ll think it’s all right not to clean the property too.

Cleaning costs will vary, especially if you have carpet or other flooring types. You might want to do the cleaning on your own, but hiring cleaning professionals will give you the best results. From removing debris to pressure washing the exterior, make sure everything is spotless.

Marketing and Showing

You’ll need to advertise your rental property to fill it as soon as possible. On some platforms, you can post rental ads free of charge. However, others require small fees. You might also want to try newspaper ads, printed signs, and flyers, especially if your rental property is still vacant after you’ve had a rental ad online.

Moreover, expect prospects to want to see your rental property in person before signing a lease. If you’re fortunate enough, you might have to show the property only once or twice. However, you often have to do it several times, which will not only take time but also include travel costs. Hence, showing can also be a costly part of tenant turnover.

Property Vacancy

A vacant rental property means lost income. This also means you’ll have to settle mortgage costs and utilities while there’s not yet a new tenant. Depending on the location and market demand, the rental unit may be vacant for a longer time.

Prepare for that income loss, and use it as a motivation to find a new tenant soon so you won’t have to use your own savings to shoulder the mortgage fees. Moreover, there are several ways to attract amazing tenants.

Tenant Screening

Before signing the lease, you should perform thorough tenant screening. This means checking reports for evictions, a criminal background, or a low credit score. Doing so will help you verify whether the potential tenant is someone you can trust to pay rent without any problems. However, these reports involve money, so if you don't require an application fee, you’ll have to use your own funds.

If you want to reduce turnover costs, you might want to include an application fee. You can use other methods to reduce costs as well, like ExactEstate’s online application feature and ability to streamline your workflow.

How To Reduce Tenant Turnover Rate

A high turnover rate can be costly, so you’ll want to keep the turnover rate low. Here are some tips and tricks to help you achieve resident retention.

Build a Strong Relationship With Tenants

You’ll more likely have long-term residents/tenants if you maintain a good relationship and smooth communication with them. Show them that you care for them by promptly addressing their maintenance concerns and more.

Advertise Your Property Effectively

Marketing your rental property the right way is one key to filling vacancies faster. For example, maximize social media by posting attractive photos about your property. You might also want to update your website and improve SEO by sharing engaging content, emphasizing hot spots, increasing your star rating, and more.

Charge a Fair Price for Rent

Keeping your rent at a competitive yet fair rate will also help you increase resident retention. While it’s natural to want to increase rent prices, you must not charge too much. Otherwise, tenants will leave, and you may have to deal with high turnover costs instead of increasing your profits.

Screen Tenants

To find responsible tenants who won’t resort to breaking a lease early, screen your rental applicants. Check their credit reports, eviction reports, and criminal reports. This way, you’ll know what types of renters they are, and you can decide properly.

By only letting in responsible tenants, you can reduce turnover costs as you’re more likely to perform fewer repairs as well. ExactEstate’s built-in online tenant screening will make the whole process easier for you.

Provide Incentives

Incentives will motivate your tenants to stay in your property longer. Consider offering rent discounts, gift cards for renewal, or upgrades like new appliances or new paint. A simple but customized note for long-term residents/tenants will also make them feel appreciated, strengthening landlord-tenant relationships.

Keep Your Policies Updated

To help promote a great relationship with your current tenants, revisit your old policies. For example, your tenants are more likely to renew their lease if you introduce a few positive changes to your pet policies.

Further, gain feedback from your tenants. You might discover issues that you didn’t know existed and can address them accordingly. Your tenants will feel heard and you’ll be able to improve your property.

Perform Exit Interviews

In connection with collecting feedback from current tenants, you might also want to conduct exit interviews for those who are about to move out of your property. This way, you’ll be aware of the issues they had while living on your property. You can even gain suggestions on how to further improve your property, thus preventing turnover in the future.

Having these exit interviews will also make the old residents feel valued. They might also recommend your property to other prospects. 

Use an Effective Property Management Software

If you want to save time, money, and resources while keeping happy tenants, an effective property management software solution like ExactEstate is perfect for you. From smoother day-to-day management to detailed reports and easy customization options, ExactEstate helps you grow your business.

Your tenants can also sign leases online, take care of their payments online, and access their resident portal wherever they go.

Final Thoughts

Tenant turnover can be costly and detrimental to your business. Thus, aim to reduce the turnover rate by keeping a fair rent price, performing thorough screening, and building a good relationship with tenants. Ensure the best experience for your tenants as well with the help of reliable rental property management solutions like what ExactEstate offers. Request a demo today!