What do you do when a tenant decides to leave without warning? What if you manage student housing properties and the majority of your renters move out during the same time frame? Unit turnovers are inevitable and can potentially trigger significant expenses for your business. In addition to the obvious loss of rent, there are additional expenses incurred for marketing the unit, along with the cost of time spent maintaining and showing the unit. The good news? It is possible to reduce the effect of these (sometimes unexpected) expenses with proper planning.
What are the real costs?
Reducing turnover rates can greatly increase the amount of savings for your business. In an article from the National Apartment Association (NAA), they reference a calculation by Property Management Minutes author, Lori Hammond: “If an apartment complex can reduce their turnovers by one a month, they would decrease their expenses by over $20,000 in annual turnover expenses.”
A short vacancy may not seem detrimental, but a number of them can certainly affect your bottom line. Five Simple Ways to Reduce Resident Turnover, by HOMEE explains that “in a market with an average rent of $1,200, even one month of vacancy loss means you need to collect at least $100 more per month than the last resident was paying just to cover the month the home sat vacant.” However, here are ways to reduce the amount of time between tenants.
How do I reduce turnovers?
While there isn’t a simple solution to reducing turnovers, there are some steps you can take to reduce their effect on your business: Anticipate, Prepare, Organize, Communicate, and Reduce Time.
Anticipate: Every property will experience a long turnover at some point. There is no way to prevent them from occurring, but it is vital to treat vacancies with urgency before their resulting expenses increase. By anticipating when turnovers might occur throughout the year, you can stay ahead of the curve and will be better off in the long run.
Prepare: Preparation is crucial. This includes pre-departure inspections to gain a perspective on what potential work needs to be completed on the unit before its current tenant moves out. In doing so, you can prepare any tools, maintenance, and supplies necessary to begin work as soon as possible. This early inspection also allows you to assess the potential costs involved in restoring the unit and determine which expenses the current tenant should be charged vs. normal wear and tear.
Organize: If you have received a move-out notice from a tenant, you will want to immediately start working on filling that occupancy. Making your contractors or maintenance team aware of upcoming work as soon as possible will ensure updates can begin right after move-out. Early action also guarantees any scheduling complications can be determined ahead of time to provide the quickest turnaround. Also, consider organizing back-up contractors to avoid delays if scheduling conflicts occur or multiple units require work. Engage with your vendors and contractors during maintenance and be involved with on-site teams, as this will help work go smoothly by vetting new vendors and creating strong relationships with existing ones.
Communicate: Building a good rapport with your tenants throughout their time at your property can be another solution to reducing turnover rates and shortening turnover length in general. Each time you have an encounter with one of your tenants, make them feel heard and appreciated. A good relationship with tenants can help them see the value of renting from your property and make it easier for both of you to handle problems, like late rent or maintenance issues. Make sure your tenants’ needs are met and any complaints are taken into consideration. Social media is another great way to boost communication—use it to keep in touch with your tenants and to help them connect with other members of the community.
Reduce Time: Dividing responsibilities among your staff is a great way to increase efficiency. Empower your employees to be their best selves in the workplace by giving them the responsibilities they handle best.
Although lessening turnover time is not always in your power, you can help navigate and prevent an extensive amount of downtime by incorporating some of the tips shared here. You’ll save yourself and your company lost hours and lost revenue by reducing the time it takes to turn your units from vacant to leased.
By Charissa M.