10 Tips To Minimize Tenant Turnover:
This article goes over some useful tips on how to minimize tenant turnover and some of the reasons vacancies will occur.
Being a landlord or managing a property can be a difficult and encompassing task. Having to maintain the happiness of each tenant to raise the chances of your tenant renewing their lease can be an exhausting job. Even more so when an increase to rental vacancy will put strain on your time, resources, and your bottom line.
A high tenant turnover rate is something that will send shivers down the spine of many property manager but can be avoided and minimized. The first step to being able to minimize tenant turnover is to understand what it is and the costs that can come along with a high tenant turnover rate.
What Is Tenant Turnover?
Tenant or apartment turnover happens when the current tenant leaves and that property remains vacated until you are able to find new tenants. During that period of vacancy, the property manager doesn’t earn any income from that unit but the costs associated with maintaining that unit continues.
Tenant turnover is a crucial metric for landlords and property managers when calculating their future budgets. Luckily, there is a way to calculate tenant turnover. This is done by taking the total number of tenants you had in a year and dividing it by the number of tenants that moved out that year:
Apartment Turnover Rate = Total number of moveouts in a year / Total number of tenants retained in that year
This rate is also known as the “move out rate” and is a vital tool for property managers to predict turnover costs.
Apartment Turnover Costs:
A high tenant turnover rate can be incredibly detrimental to a business’ profitability and growth. Its been estimated that the costs of a vacated unit can rise to well over $3,000 and the average cost being around $1,825. It’s because of the steep costs per unit, that if you aren’t careful and keeping a keen eye on the turnover rate, your running the risk of your business suffering from a high vacancy cost build up.
To help put that average monthly cost of $1,825 into perspective, here is how the costs of vacancy are usually broken down:
Rental Loss ($1,300): This being one of the bigger and more predictable portions of the losses associated with tenant turnover.
Maintenance & Cleaning ($450): Whenever a tenant leaves a unit, that unit has to be deep cleaned and any problems within the unit have to be repaired.
Advertising ($50): No longer can a property manager just throw up a “For Rent” sign and expect to attract desirable tenants. Now you must spend the money to advertise and to be put on good listing websites.
Screening ($25): This part is an investment not only on your wallet but on your time as screening for new tenants can be a grueling task. After narrowing down potential tenants, you also must then pay for the screening of each potential tenant. Screening can be an drawn out process that ends up costing even more than the listed $25 if you consider the staffing costs to go through screenings.
Why Does Tenant Turnover Happen?
Now that we know what tenant turnover is and the costs associated with tenant turnover, its time to inspect the most common reasons that a turnover will occur:
Wanted a better home
Job Relocation:
To establish their own home
Wanted cheaper housing
Change in life or family
However, many of the most common reasons are factors that may be out of your control as a landlord or property manager. However, there are factors that are well within your control that could handily aid in minimizing your tenant turnover rate:
Maintenance Issues
Poor Communication
Affordability
Neighborhood
Some Tips To Minimize Turnover:
Be Considerate Around Rent Increases: Consider your tenants current circumstances before increasing rent and always be sure to explain your rent increase policy before signing any lease agreements.
Screen Good Tenants: Making sure that you’re bringing in reliable and quality tenants can be one of the most vital steps in minimizing turnover rates. This can be more assured by conducting a thorough credit, background, and employment checks.
Be Responsive: Making efforts to be present with your tenants can go a long way. This allows your tenants to feel valued and for you as a property manager to have a good pulse on tenant needs. Always have an immediate maintenance service ready to respond to issues and make improvements regularly.
Revising Policies: If too many people are unhappy with your policies then it may be time to find a way to revise your policies that more closely fit the criteria of both the tenant and the property management.
Offer Incentives: Incentives can be motivation for tenants to stay with you as well as help strengthen positive relationships between property management and the tenants.
Workflow Automation: Managing a property can be excessively tedious with all of the paperwork and emailing involved. AI-solutions have offered a great service to help eliminate some of the more tedious work so that property managers can focus on more nuanced sides of the job.
Create An Effective Marketing Strategy: Having a good marketing strategy is integral to every kind of business’ growth. Property managers need to have a good bead on what marketing channels they need to be focusing on.
However, even with all of the information listed here, this will barely scratch the surface of all the inventive ways tenant turnover can be minimized. If you’re a landlord or potential landlord and the long list of duties seems all but too daunting, do not be afraid to reach out to the many talented property management companies located in Tucson, Arizona!