When you decide to manage all the day-in-day-out aspects that come with owning an investment property you will no doubt digest every bit of information you can find on getting the right tenants. How to screen them and check the details of their application. And ways to make sure you are kicking off a great landlord-tenant relationship. This is exactly what you should do. This is the first step in minimizing your tenant turnover expenses. Below, we’re going to look at a few of the ways you can save yourself some of the costs associated with transitioning from one tenant to another.
Don’t turnover your tenant
I know this sounds ridiculous, but if you can keep your tenant in place you have exactly no costs associated with bringing in a new tenant. This means making sure your relationship stays strong with the tenant you worked so hard to get in there in the first place.
When the tenant calls with an issue, try to get it sorted as quickly as you can. Great customer service can be an incredible reason for anyone to stay put. There are also all sorts of little things you can do such as landscaping, automatic garage door openers, fresh paint, or newer appliances that will make sure the tenant knows they won’t find as great a deal anywhere else.
Of course, sometimes no matter what you do you are going to lose a tenant. Either their lives will change to require a different sort of space, such as a new baby or they will be moving away from the area for work or family. If you absolutely can’t get a good tenant to stay how can you keep the costs from getting away from you?
Join a landlord association
Credit checks and all the screening work required can be pricey when going through a pile of tenancy applications. When you join an association, included in your membership fee will be the ability to take advantage of discounted credit checks. Often you can get them done for half the price at the association rate. They will also include leases you can adapt and use as well as providing a selection of included member learning resources.
Set your price with a turnover in mind
When you’re setting your rental rate you know there is likely going to be some time where the property is going to be empty. Build this cost into the rental price. It doesn’t have to be a drastic addition to the rent, but by simply adding a few dollars to the price you would like to receive in rent you can create a cushion that can be used in times of vacancy. Of course, it’s important to make sure you set this small amount aside for just such an occasion. Trust me, you will be glad you did.
Turn everything down
When a tenant moves out, this means that any utility fees, while the place is vacant, are now going to be billed to you. You are, of course, going to need run the utilities so you can keep the place looking nicely lit and comfortable for potential tenants but you want to make sure that all unnecessary costs are turned off. Consider using timer lights, so the property looks lived in for a few hours in the evening. And if the time of year demands that you have to heat or cool the place for comfort keep them to the bare minimum until a few hours before the appointment. You may want to consider a smart thermostat so you can login remotely from an app to increase the heat or cool it appropriately.
Keep the utilities in your name
This one can be controversial. With the often competitive rental marketplace, many landlords want to put the utility costs in the hands of the tenant. And it’s not a bad idea to get out of paying these bills. However, by keeping the bills in your name you can avoid having to pay the setup fees associated with keeping the power flowing between tenants. There are a couple of solutions for this. First, you could build the price of utilities into the rental price. This option means that any time the utility bill is cheaper than the amount you factored into the rent you get to pocket the difference. The downside is that there is no incentive for the tenant to conserve energy and you may find those bills a touch higher than you had hoped or allotted for. Another option is to keep the utilities in your name and pass the bills along to the tenant. This could be done by creating your own invoicing system for utilities, or simply by sharing the bills with the tenants as they arrive and having them include the fee in the next rental payment.
Use durable fixtures and finishes
When you’re choosing the options for your investment property, make sure you are selecting options that are going to last. Avoid installing carpet and instead, go for a durable laminate flooring. This way you know that when the tenant moves out there is not going to be a full-scale replacement required to make the place look desirable again. Spend a little more on the faucets and finishes and they will last you many years longer than the cheap ones and likely won’t need replacing between tenants. And despite the higher cost, make sure they aren’t too trendy. The last thing you want to be doing is swapping out perfectly good fixtures because they make the home look out of date to potential tenants.
Do upgrades with a tenant in place
This may seem counter-intuitive, but if done right it can make the tenant feel like their opinion matters and keep you from having to do too much in the way of renovation when they leave. If you need to replace flooring or faucets create a small selection of options and let the tenant make the final decision. They usually won’t mind the bit of disruption knowing that they are getting an upgrade and by bringing them in for their opinion they feel like they are really being listened to. This may be enough to keep them in place as tenants and at the very least if or when they eventually decide to leave the property is ready to be rented out right away!
Sometimes it can feel like no matter your best intentions there is a long list of things that need to be done to a property during a vacancy. Whatever you do, don’t wait to start getting the marketing of your property underway. The less time your property sits empty the less you are going to pay out in costs and the less you are going to lose in rental income.
Even if the property is not perfect, get it listed the moment you receive notice from the existing tenant. Just be sure to let any prospective tenants know about the work that has yet to be completed. If you sign a lease with a new tenant and there is still upgrade work to be done, use the technique from above and let them make some of the selections for their new home. It will help them feel excited about your new landlord-tenant relationship and hopefully encourage them to stay a long time!