Landlords will agree with me that most of the temporary vacancies are caused by the tenant turnover. Tenant turnover is basically the time between on tenant moves out and the other one moves in. This is not an issue if you manage to place a tenant at the same time when the previous tenant is moving out. This way you will not loose any income. Unfortunately potential loss of rental income is not the only cost that we are dealing with when we talk about the tenant turnover. As a landlord you may incur all kinds of other expenses. The most significant in my opinion is the time spent re-renting the unit and move out the current tenant. Here is a list of most typical cost of tenant turnover:
Moving out/Moving in processing cost
- This does not necessarily need to be a financial expense, but it certainly is a one that takes a lot of time. A move out inspection is due and if you want to prevent out of pockets expenses to cover the hidden damage caused by the tenant, you better be diligent with the inspection! There is many things that can be hidden away and believe me that some tenants will do everything possible to hide any damage which they could be charged for (I highly recommend routine inspections). Obviously move in inspection is as important as move out. Here my suggestion is that you rent out your place in spotless condition to prevent any misunderstanding between you and your tenant. If you rent your place deficiency free, then there is no question who caused the damage if there is any at the tenant’s move out. Of course there are other processing expenses such as postage when mailing out the damage deposit, cost of cheque etc.
Maintenance costs
- Even after a good tenant moves out, your place will usually show some wear and tear. Scuff marks on the walls, chips here and there, leaking faucets. In my opinion a rental property should be re-painted after any tenancy one year or longer. It is not only hygienic and it helps to preserve the value of your property, but it also helps you to rent your property faster by making it more appealing to a potential tenant. Professional cleaning and carpet cleaning, which usually is the responsibility of the tenant might be also necessary or beneficial.
Advertising and Showings
- I know, you think “What is this guy talking about? What advertising cost?! I will just post it on Craigslist.” You might be right, but it does not necessarily need to be enough to rent your place. As the rental market is getting more and more competitive you must make your property stand out. Professional pictures and video tour are a good way to market your unit and also target more specifically the tenants that are looking exactly for what you have. There might be things that people do not like about your place and it might be the deal breaker. Yes, you do want to present your place in the best possible light, but if there an issue that the tenants can not get over (carpet in the bedrooms, might be allergic) you will be wasting your time showing the place…
- Showings can be very time consuming and believe me that time is of an essence. You do not want to postpone any viewing requests, as there is a good chance that if you postpone the showing even one day, the potential tenant might be gone. People usually line up a bunch of viewings and the truth is that places in Vancouver are quite similar and the inventory is large.
Application Cost
- If you are planning to run a credit check, it comes with a price tag. Let’s not forget that running the reference check, is a time consuming matter and you do not want to be negligent when screening the tenants. Running the application is certainly the only most important part of renting your place.
Vacancy
- Vacancy is the most significant cost. Even a one month of vacancy, can dig a big hole in the financial performance of your investment. One month of vacancy can decrease your average monthly rental income by hundreds of dollars and you still have to pay your mortgage and pay any property related expenses. Other issue might be insurance. Most of the insurance companies do not like to insure vacant places and a claim while the place is vacant might be a problem.
Avoiding the tenant turnover is one of the most effective ways to keep you cash flow positive. I cannot stress enough how important it is to keep good tenants. In might next article tomorrow I will share with you ways how to keep good tenants.
Do you need my help with your rental?
It sounds like a lot of work and placing a new tenant can be a painful process. A quality property management can make your life a lot easier. We have developed efficient procedures to avoid tenant turnovers and to keep your property safe and profitable.
Please feel free to contact me via email at leo@bolld.ca or call me at: 604-671-0293. Don’t worry, my advice is free. To get a free quote and a rental value assessment please visit: https://bolldpm.com/book-your-next-consultation-with-us/
Thank you for reading!
Leo Chrenko
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