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Vacancy costs are expensive, and many landlords in Manhattan Beach understand the importance of limiting vacancy. However, it’s easy to forget tenant turnover and the costs you incur when one tenant moves out and you have to prepare the property for a new tenant. Today, we’re helping you budget for the cost of tenant turnovers, and offering some tips that may help you minimize the expense.
Tenant Turnover and Vacancy Costs
When your tenant moves out, rent ceases to come in. Even if your turnover lasts less than a month, you’re still losing rental income on a vacant property. It’s going to take you some time to repair and clean the home, find a new tenant, sign the lease. You’ll need to plan on losing at least a month’s rent during a turnover period. It’s always good to be proactive with placing a new tenant, and hopefully you’ll get someone new in place in less than a month. However, for the purposes of budgeting conservatively, you should expect to lose a month of rental income during a tenant turnover.
Maintenance and Repair Costs
If you have a great tenant in place, you won’t have to do a lot of maintenance or make a lot of repairs after move-out. However, you’ll still need a few days to inspect the home and look for any damage that was left behind. You’ll need to have it professionally cleaned, and you might need to give it a fresh coat of paint or some new carpet. Any damage that was caused by the tenant can be taken out of the security deposit, but you’ll need to pay for wear and tear items such as scuffs on the wall from furniture or small nail holes. You might want to update your landscaping or install fresh light fixtures or flooring before a new tenant moves in. These things will take time and cost money.
Marketing Costs during Turnovers
To find a new tenant, you’ll have to market the home. If you know the property is in great condition and you have a tenant who is willing to let you show the place while he or she moves out, you can begin marketing before your current tenant leaves. However, you’ll need to take good pictures, advertise the property, and be available to answer questions and schedule showings. This will cost you time as well as money because you want to be available whenever prospective new tenants want to talk to you or see the property.
Avoiding Turnover with Tenant Retention
The best way to keep your turnover costs down is by limiting your turnover. Keep good tenants in place so you don’t have to worry about the resources required to effectively turn a property over. When you communicate well with your tenants, provide incentives at lease renewal time, and respond promptly to maintenance, you have a better chance of keeping your tenants in place. While an increase in rent is normal and expected at the end of a tenancy, keep those increases reasonable so you don’t give your tenants a reason to look for another place.
If you have any questions about how to contain turnover costs, please contact us at South Bay Property Management Pros. We’d be happy to help.