Other than finding prospective tenants, a landlord's main goal is to reduce tenant turnover rates to maximize their rental income.
High tenant turnover is a problematic circumstance in rental properties, and the reasons can range from inefficient property management to declining neighborhoods.
Learning what's causing you to lose tenants can help you tackle the problem at its root and effectively minimize tenant turnover rates. Here are potential reasons that you can look into.
1. Poor Property Maintenance and Repairs
Neglecting Property Upkeep
While tenants are responsible for certain maintenance tasks, like keeping the property clean, you still need to keep up your end by conducting regular maintenance or responding to maintenance requests. Failure to do so can lead to terrible living environments, including faulty HVAC systems and pest infestations.
Poor Quality Repairs
Avoid patchwork fixes to save on repair costs. Using substandard materials can lead to recurring problems, which will increase tenant turnover and repair costs for having to redo repairs when they don't hold up.
2. Unprofessional Property Management
Lack of Communication
Landlords or property managers need to be transparent to tenants and communicate when needed. Ignoring inquiries, not providing timely updates, and being difficult to contact can lead to a bad landlord-tenant relationship.
Unprofessional Conduct
Landlords and property managers must respect their tenants' rights and privacy. Failure to do so may be unethical or even illegal. For instance, entering the premises without proper notice or responding rudely when a dispute arises may be unethical or even illegal.
3. Unfair Rent Increases and Fees
Rent Hikes
Lease renewals will be decreased when you implement unexpected rent increases throughout the lease terms. If you intend to do so, make sure you add a clause in the lease agreement or justify why you have to raise the rent price, such as increased expenses.
Unfair Fees
Tenant turnover can easily increase if you charge for circumstances where you shouldn't, such as security deposit deductions for property owner-covered repairs. Take note that there are landlord-tenant laws regarding fees like security deposits.
4. Poor Tenant Screening
Lease Violations
Finding new tenants can be hard, but finding quality tenants is harder. It's your responsibility to protect your rental property from potential tenants who will violate your lease terms, such as not paying rent or not maintaining the property. You can do so by thoroughly conducting background checks.
Resorting to Evictions
As much as landlords or property managers aim to reduce tenant turnover, eviction is sometimes the best thing to do to prevent further issues. Not only will you have to deal with the tedious process of an eviction, but you will also have to pay for tenant turnover costs.
5. Restrictive Lease Terms
Stringent Policies
Being too restrictive will effectively hurt your tenant retention rates. Some examples are limitations on guests, pet policies, or noise restrictions. When your tenants feel unwelcome or the living arrangement is overwhelming, your apartment turnover rate will skyrocket.
Lack of Flexibility
Tenant satisfaction sometimes means slightly changing your rules to accommodate tenant needs. Landlords and property managers must consider that some policies are unsuitable for all tenants and that compromises can help prevent tenant turnover.
How You Can Reduce Tenant Turnover
- Communicate with Your Tenants: Landlords and property managers should be reachable and understanding when dealing with tenant concerns and inquiries.
- Try to be More Flexible: Adjusting your lease terms to accommodate the tenant's needs can enhance tenant satisfaction.
- Thorough Tenant Screening: Conducting tenant screening can weed out tenants who might violate your lease terms. You can also select tenants based on compatibility and their expectations of your rental property.
- Hire a Property Manager: A property management company has the expertise and resources to keep your business's turnover rate below the average tenant turnover rate. They can also find new tenants when apartment turnover occurs.
- Maintain Your Property: Landlords or property managers should maintain the property to ensure it remains habitable and create a comfortable living environment for old and new tenants.
- Create a Sense of Community: When tenants feel valued and welcome, they will likely renew their leases. With more tenants retained, you'll have a steadier cash flow since you'll prevent vacancy periods.
How to Calculate Apartment Turnover Rate
To calculate your tenant turnover rate, divide the number of tenants who move out annually by the total number of tenants in your rental property in that same period. Multiply it by 100 to get the percentage. The formula is as follows:
Tenant Turnover Rate = (Number of Tenants Who Move Out / Total Number of Tenants) x 100
Compare this with California's average apartment turnover rate, which is around 40%.
What Are the Apartment Turnover Costs?
- Marketing and Advertising Costs: You will need to market your rental unit listing again to find suitable tenants and potentially pay listing site fees.
- Cleaning Costs: You'll have to clean out the unit, remove any personal belongings your tenant may have left behind, and deep clean the premises.
- Repair and Maintenance: To ensure that the vacant unit is ready to rent, you will have to conduct maintenance checks and repair any damages caused by the previous tenant.
- Potential Legal Costs: If the previous tenant vacates the unit through eviction, you may have to pay certain legal fees to see it through.
Hiring a Professional Property Management Business to Minimize Turnover
A professional property manager with the expertise to retain tenants and ensure that the property remains competitive can benefit your rental business.
Companies like Blue Line Property Management will stay on top of maintenance issues, improve tenant retention, and quickly fill vacancies when needed. You'll have nothing left to worry about as they handle your operations.
A stress-free landlord is someone who has more time on their hands. You can turn your attention to other matters like personal time or finding more profitable investments. Without juggling landlord duties, you can expand your portfolio in no time!
Learn about what we can do for you and schedule a free consultation so you can determine whether we're the right fit for your investment journey.
