As a landlord, it’s in your best interest to create a living situation that tenants want to stay in. Why? Because replacing tenants is a costly endeavor. It’s not just about the rent lost in the days the property sits empty. The real cost encompasses several facets—each impacting your bottom line. Read on to learn how much tenant turnover costs landlords.
The Hidden Costs of Vacancy
Vacancy costs go beyond the obvious loss of rental income. Every day a property sits empty is a day of potential income lost.
But the impact deepens when considering the marketing expenses to attract new tenants. Here are just a few costs that run in the background for a vacant unit:
- Advertising
- Property listings
- Hiring a real estate agent
The costs will add up.
Preparation Costs for the New Tenant
Preparing your property for a new tenant often incurs the most significant chunk of turnover expenses. Everything to do before a new tenant moves in costs money, including deep cleaning, repairs, painting, and possibly updating appliances or fixtures to remain competitive. These efforts, while necessary, demand both time and money, directly affecting your return on investment.
The Administrative Side of Turnover
Turnover isn’t just a physical or financial ordeal; it’s an administrative one too. For example, you’ll have to do the following:
- Screen new tenants
- Conduct background checks
- Draft lease agreements
- Possibly deal with legal fees for eviction proceedings
All of these administrative tasks require resources. Not to mention, the time you invest in these activities is time away from other profitable endeavors.
Long-Term Impacts on Property Value
Frequent tenant turnover can indirectly affect your property’s value. High turnover rates might suggest to potential renters—and buyers, should you wish to sell—that there’s something undesirable about the property.
Additionally, constant wear and tear from moving furniture in and out can physically degrade the property more quickly.
Final Thoughts
Now that you know how much tenant turnover costs landlords, you have that much more of a reason to provide the best living experience possible for your renters. Happy tenants stay, saving you the costs of replacement. Additionally, you’ll boost your property’s reputation, making it much easier to sign new tenants when someone does decide to leave. Basically, you can’t lose by offering the best rental experience you can.
