It’s turnover time.
Your tenant has given the required amount of notice, and you know they’re moving out at the end of their lease term. This should trigger a process that’s well-organized and efficient. You don’t want to waste time during the turnover because time is money. Every day that your property isn’t occupied is a day that you aren’t earning rent.
The vacancy cost is one thing.
The turnover costs can be brutal. Having managed hundreds of turnovers throughout Phoenix and the East Valley, we understand the urgency of completing a turnover in an efficient and timely manner. We also have some tips on how to save money during a tenant turnover.
Work Quickly to Turn the Property Over
A turnover process that lasts for months is going to cost you more than it should. That’s a lot of vacancy time.
Without any rent coming in, you’ll have a depleted reserve to fund the expenses you have to pay during the turnover, such as the maintenance and the cleaning. You cannot protect your cash flow and long term ROI when there’s no one paying rent.
That’s why you need to work quickly and get the property re-rented as quickly as you can.
Two things will help you accomplish this:
- Positive tenant relationships. When you establish and maintain a professional and respectful relationship with your tenants, the move-out process is much smoother and you can get a jump start on the turnover necessities. Once you receive a notice to vacate, stay in touch with your departing tenant. A good relationship means that the tenant will give you plenty of notice before they move. They’ll follow all of the move-out instructions and keep the property well-maintained. They’ll clean it before they leave and they’ll remove all of their personal property and trash. This will help you turn the home over faster. A good tenant relationship means you’re unlikely to walk into a property that’s been damaged or destroyed.
- Set yourself a strict deadline. Decide how quickly you want to get that home re-rented and then work backwards from that target date. With the right vendors and resources and a property that’s already in good shape, it might take you only a day or two to turn the property around and get it back on the market. Without a stated deadline, you can let the process drag on too long.
Make sure your tenant has left according to the requirements of the lease agreement. You want to collect their keys and their forwarding address. Then, get inside the property as soon as you can to begin your process.
Contact Your Best Vendors and Get the Work Going
A list of preferred vendors will help you save money on turnover. They’ll be fast, organized, and committed to high quality work and affordable prices.
An excellent network of vendors and contractors is essential. Take the time to establish these relationships so they’ll prioritize the work you need when you’re preparing the property for a new tenant. When your maintenance team works faster and more efficiently, your turnover costs drop. Here are the benefits to having a maintenance team already in place, and how it can save you money while you’re turning over your property:
- Access competitive pricing from your best vendors
A good vendor list will keep your turnover costs down because you get a lot of value when you’re working with vendors and contractors who have worked with you before. They’ll know your property. And, they’re going to provide their best prices because of the consistent work you provide them for every turnover or during your preventative maintenance schedule.
- Making repairs and replacements without delay
These pre-existing vendor relationships mean you won’t wait too long for your work to be done. Whether you need a roofer, a fence repaired, an HVAC service, or a restoration project during your turnover, you can count on the team you always use to take care of these things in as little time as possible. They will be willing to prioritize the work that you need.
- You can access expert opinions and reliable advice
With good vendor relationships in place, you can also access their expertise and support. Listen to any recommendations that your preferred vendors share. This is their area of expertise, and you can trust they know what they’re talking about.
Maybe you’re wondering if you should repair something again or just replace it. If you repair, you’ll likely save some money. But, the life of that repair may only last a year or two. But if you replace, you will have to spend a little more money now, but the property will look good and the replacement will last for decades. A preferred vendor network will help you make these decisions. You can access their expertise while preparing your home for a new tenant. That’s going to save you money.
Be Willing to Invest in Property Improvements and Upgrades
Spending more money? That might seem counterintuitive when we’re talking about keeping turnover costs low.
But, you’re thinking about your investment in the long term. This won’t be your only turnover. If you can invest a little money today, your future turnovers will be much faster and a lot less expensive. So, remember that the turnover process isn’t only about repairing and restoring. It’s also about improving. To remain competitive in the local rental market, your property has to be modern and inviting. This will likely require some updates and upgrades.
These are expenses you might not want to take on, especially during a period when rent isn’t coming in. However, it’s the best possible time to make some minor renovations because you don’t have any tenants in place to work around, and you’re trying to rent your property out for more money.
Increasing the rental value of your property will reduce what you lose during the turnover work. Take this time to upgrade whatever you can in a way that’s cost-effective.
Surely, your property does not require a full renovation. There’s no need to rehab the entire kitchen or add another bedroom. Unless the former tenants completely destroyed the home, you’ll be fine making some small improvements that will raise your rental value.
Look at these turnover costs as an investment, not an expense. Here are the upgrades we often recommend:
- New fixtures on sinks and vanities
- Hard surface flooring instead of carpet
- New lighting in kitchens and bathrooms as well as outside
- Extra storage, especially in kitchens and bathrooms
- New mirrors over vanities
- Updated landscaping
Consult with your vendors and decide which projects to tackle during this turnover period. You’ll find that you’re able to earn more and attract better tenants. It won’t be long before you earn back what you’ve spent on these improvements.
Set a Turnover Budget and Stick to It
Budget more than you’ll actually need for your turnover and you’ll find yourself pleasantly surprised at what you didn’t spend. This will avoid surprises, and if you have some money left over, keep it in your maintenance reserve.
As you’re thinking about much you will need to budget, consider the age and general condition of your property. Turnover costs will depend on how much wear and tear was left behind after the last tenant. They will depend on how long the tenant lived there and whether they took good care of the home.
- The wear and tear issues
Damage is the tenant’s responsibility, and as long as it’s well-documented, you can hold your departing tenants accountable and make any claim against the security deposit that qualifies as tenant damage.
Wear and tear is not damage, however. It’s the deterioration of the property that would normally occur under any circumstances – even if you were living there yourself. Wear and tear includes small holes in the walls from where paintings were hung or scuff marks on the walls from where furniture was placed. If there is wear in the carpet in high-traffic areas, that’s not going to be the tenant’s responsibility.
You’ll need to be prepared to pay for these things. You’ll also want to budget for the fresh paint you’ll want to apply and the professionally cleaned carpet if it’s still in good shape and doesn’t need to be replaced. You’ll have to buy new air filters and water filters for your refrigerator.
- Budget for upgrades and updates
Those improvements we talked about will need their own budget. Decide what you want to do, and then decide how much you’re willing to spend.
Remember that the best way to budget for turnover costs is to avoid them. We like to emphasize the importance of tenant retention. When you can hang onto your good residents and convince them to renew their lease agreements, you save a lot of money.
We can talk to you about tenant retention plans, and we can also help you have a less disruptive turnover period. Let’s talk about your rental investment property. Please contact us at TCT Property Management Services. We manage homes in the East Valley, including Mesa, Gilbert, Chandler, Scottsdale, and Phoenix.