What would you feel when a tenant says that they are moving out? It feels like a minor inconvenience at first. However, the numbers tell a very different story. Tenant turnover is among the most expensive events in rental property management. Many landlords underestimate just how much it will cost them every year. Read on and let’s explore it in detail. 

Financial Reality of Tenant Turnover (Cleaning, Repairs, Lost Rent, Listing Fees)

Landlords view turnover as a straightforward process. Cleaning out the unit, finding a new tenant, moving on. Turnover costs also add up quickly, literally digging far deeper than that.

Cleaning the Unit 

First, a few tenants leave your unit spotless. At best, you’re paying for professional cleaning, which costs between $150 and $400, depending on square footage. Carpet cleaning can tack on another $100-$300. You may offer tenants the option to clean to avoid getting charged for cleaning after move-out. 

Managing Repairs 

Repairs are next. Walls need touching up. Fixtures wear out. Doors, door locks, and appliances may need replacing. A “light” turnover can cost you $500 in repairs. Heavier turnovers can easily cost $2,000 or more. If the tenant caused severe damage to your property beyond standard wear and tear, you may even need to completely renovate one or more rooms.

Paint tends to be the biggest expense. A fresh coat of paint for a two-bedroom unit will cost you $800-$1,500 to have done professionally. That cost recurs every time you have a turnover.

Lost Rent During Vacancy 

This is the vacancy cost that stings the most, but it is unavoidable. Every day your unit is vacant, you are losing money. If your unit rents for $1,500/month, you lose $50 per day until you have a new tenant. That 30-day vacancy costs you $1,500 in lost rent. Make it a 60-day vacancy, and you may have already lost $3,000.

The national average time to lease after turnover is about 30-45 days, but can be much higher in slow markets. Factor lost rent into your repair and cleaning costs, and you’re looking at $3,000-$5,000 or more for a “typical” turnover. 

Listing & Leasing Fees 

Of course, you still have to fill that unit with a new tenant. If you work with a property management company, they may charge you one month’s rent as a leasing fee. If you advertise the unit yourself, you still incur costs for photography, online listing fees, not to mention your time screening applicants, showing the unit, and processing paperwork.

Background checks and credit reports run about $30 to $75 per applicant. If you have to screen multiple applicants before you find a qualified tenant, those fees can really add up. Sometimes you may lose money from the previous tenant as well. Collecting rent after a tenant moves out requires prompt documentation. 

Online advertising costs can range from $0 to several hundred dollars depending on the service (Zillow, Apartments.com, local marketplace websites, etc.) and how much traffic you need to generate.

Primary Reasons Tenants Leave 

Turnover costs you money. Knowing why turnover happens is worth even more. Did you know that most tenants do not leave willingly? Something has happened that caused them to move, and the best part is that you can prevent most of those reasons from ever happening.

Unresponsive Landlords 

This is by far the most common thing I hear from renters. They had an issue and reached out to their landlord, but they got no response. Once trust is broken like that, it’s hard to get it back.

They don’t need their landlord to be their best friend. They just want a landlord who will respond when they need something.

If your landlord replies to their phone calls/texts/emails within a couple of hours, they will likely become a loyal customer for life. If it takes days or weeks for your landlord to get back to you, you start to feel like you’re not important.

Maybe create a system where you have a dedicated phone number for your rental property. There are even property management apps you can use. Set a time for you to respond to inquiries that you can share with your tenants. Doing this may somehow show tenants that you care about their requests. 

Poor Maintenance Resolution 

I get it, a dripping faucet can wait till Monday. What about when the heater breaks and it’s the middle of January? Your response time on maintenance requests is huge.

Again, they know you can’t snap your fingers and fix something instantly. What they WILL tolerate is being told you’ll get someone over and then never hearing from you again. Or you promise they’ll get someone out in two days, but it takes two weeks.

Pick a handful of contractors you know and trust. Know how long most jobs will take and communicate that with your tenant. Even follow up with your tenants after the job is completed. Your tenants don’t need to love you, but they should respect how you run your business.

Lack of Community Involvement 

I know what you’re thinking: why on earth would tenants stay because they feel like they fit in with the location of their rental property? Hear me out. 

When tenants feel like they belong someplace, they are much more likely to stay there. Buy your tenants some damn swag when they move in. Throw in a holiday card once a year. Or call them a month in to ensure everything is working for them.

If you have multiple rental units in a complex, encourage your tenants to get to know each other. Make it feel like a community. Renters are people too, and when they make friends who like where they live, they aren’t going to just pack up and leave.

Remember: Renters don’t leave places; they leave landlords.

Final Words

Tenant turnover can be costly, disruptive, and 100% preventable. It’s much more than losing paint chips. Lost rent, repairs, cleaning fees, and leasing costs can cost you thousands of dollars every time a renter leaves your property.

The easiest way to safeguard your bottom line is to think of tenant retention as part of your business plan. Address problems quickly, repair what needs fixing, and show your tenants they’re valued. A happy tenant who renews their lease for many years is GOLD.