Managing rental properties is a strategy fraught with complications and issues that compromise the convenience and profitability of this otherwise lucrative endeavor. Among the biggest problems that landlords face is tenant turnover, which in extreme cases can totally jeopardize your ability to make money.

However, many landlords think about tenant turnover the wrong way, or miss critical elements about tenant turnover that prevent them from achieving their best. What do landlords get wrong about tenant turnover and what should they be doing instead?

The Problem of Tenant Turnover

Tenant turnover bears significant impact on the success of your rental property management strategy. Essentially, tenant turnover is a description of tenants leaving your properties. High tenant turnover means you lose tenants frequently.

High tenant turnover is bad for several reasons, all of which play a role in increasing your costs while decreasing your income. When tenants leave, you’ll bear the costs of facilitating move-outs and clean-ups. You’ll also be forced to market and advertise the property for new tenants. And during this transitional phase, you won’t have any income generated by the property, but you’ll still continue bearing regular upkeep expenses.

It’s only natural to lose tenants occasionally. Nobody lives in a property permanently. However, it’s important to keep a close eye on your tenant turnover to prevent it from growing too high.

The Biggest Mistakes and Misconceptions

What are the biggest mistakes and misconceptions that landlords have about managing tenant turnover?

·         Tenant turnover is a secondary consideration. Some landlords treat tenant turnover as a secondary consideration. They crunch all the numbers associated with the property from a superficial level, and then make decisions to maximize profitability. They charge the highest amount of rent possible, they avoid expenses whenever they can, and they push back on every little issue with the hopes of squeezing more money out of the property. In the short term, this can be an effective way to milk a property for more profit. However, it usually leads to much higher tenant turnover. The solution is to treat managing tenant turnover as a priority on equal footing with other profitability considerations.

·         Tenant turnover is out of your control. Some landlords avoid proactively managing tenant turnover because they see it as a variable beyond their control. Tenant turnover can be expensive, but most of these costs can be managed, controlled, or mitigated (or some combination of the three). You may not be able to prevent a tenant from leaving, especially if they’re leaving for a reason like moving to a location with a new job or dealing with a major change in the family. But broadly speaking, and over the long term, preserving low tenant turnover is both controllable and possible.

·         A good property will keep tenants happy. It’s tempting to think that if your property is good enough, your tenants will naturally want to stay. But the reality is the functionality and aesthetics of your property are only a couple of pieces of the puzzle. It’s true that most tenants will be more likely to stay at a property they genuinely love and appreciate. But you also need to have a good relationship with your tenants; a bad landlord with a good property is still a cause for most tenants to leave.

·         Issues will lead to tenant turnover. It’s reasonably tempting to think that issues associated with your property will lead to higher turnover. In extreme cases, this is definitely true; if there are constant, egregious issues, no reasonable person would continue staying at the property. However, in most cases, issues themselves don’t lead to tenants leaving. Instead, it’s about how you manage those issues. Landlords that are compassionate, proactive, communicative, and caring can make tenants feel even better about staying at a property when it experiences issues. Conversely, even a single issue that’s poorly managed could cause a tenant to leave.

·         The costs of turnover can be mitigated exclusively through proactive action. So far, we’ve elaborated on the direct control that landlords have over tenant turnover. But it’s also important to recognize that the costs of turnover can’t always be managed through proactive action. Sometimes, it’s important to react appropriately when responding to tenant complaints and concerns. And sometimes, tenant turnover issues are totally outside of your control.

·         The costs of turnover for a property can be mitigated within that property only. Many landlords believe that managing tenant turnover is a property-by-property issue; handling a given property and the tenants occupying it are the only surefire ways to mitigate potential costs. However, you can also mitigate tenant turnover issues by proactively managing your investment portfolio. If you have more units and a more diverse array of investment properties, no single tenant loss will have an impact on your ability to make a profit.

Tenant turnover is a relatively simple problem to describe, but it becomes more complicated in abstract consideration, since each of your tenant relationships is going to be unique. The problem becomes even more complicated when you’re managing a bustling portfolio of different investment properties, since there will be even more variables to consider and manage. However, if you’re willing to challenge your baseline assumptions, and if you’re willing to work proactively and diligently to avoid tenant turnover, you can keep this expensive variable in check and preserve the overall profitability of your real estate investment portfolio.