Tenant turnover isn’t just a hassle. It’s one of the most expensive components of property management. While the cost of vacancy eats away at your bottom line, there are a number of other out-of-pocket expenses that must also be incurred in order to get those empty units filled again. To put this into perspective, let’s take a more detailed look at how tenant turnover can financially impact your business.
- Cleaning/Repairs – When a tenant moves out, there are almost always going to be some costs associated with cleaning the unit and performing any repairs that are needed in order to get the property ready to rent again. Even if you can handle these tasks in-house, it’s still an expense that must be accounted for.
- Marketing – Once a vacant unit is ready to be rented again, you’ll need to market it to the masses. While there are certainly some free avenues you can take for this, such as social media, you’ll get better results by diversifying. That means you’ll likely need to place ads, print flyers, and invest in paid listings. The wider the net you cast, the bigger and better the pool of candidates you’ll end up with.
- Administration Costs – As the old saying goes, time is money. One expense you have to figure in when it comes to tenant turnover is the time it will take you or your staff to handle all the necessary steps to get each vacant unit re-rented. This includes everything from arranging for cleaning and repairs to creating and placing ads, processing applicants, showing the property, and more.
Minimizing Tenant Turnover Costs
Despite your best efforts, there’s simply no way to prevent tenant turnover entirely. There are, however, certain proactive things you can do to keep the costs associated with this inevitability as low as possible.
First, focus on keeping your good tenants happy. The more satisfied they are, the less likely they’ll be to move out, which will keep churn – and its costs – at a minimum.
Next, prioritize inspections and maintenance. Many potentially costly repairs can be avoided by conducting regular inspections of your properties and staying on top of maintenance issues.
Thirdly, lean on technology as much as possible. By leveraging tools like property management software, you can automate and streamline many of the steps in the rental process. This will save you both time and money.
In a perfect world, all tenants would be long-term and reliable. Unfortunately, this isn’t the case. By understanding the true costs associated with tenant turnover and knowing what you can do to minimize those costs, you can plan your budget accordingly and create a more financially sound future for your business.