In an ideal world, every tenant would be an amazing long-term resident, and you’d rarely have to worry about turnover. In reality, tenant turnover happens far too often.
There are many details to worry about when transitioning a rental unit from one tenant to another, like reviewing your lease, providing proper notice for inspections, handling security deposits, interviewing applicants, and working with outside vendors. Needless to say, the process can become overwhelming, especially if you’re doing it all on a regular basis. And of course, every day your rental stays empty means you’re losing money.
The good news is that the better prepared you are to handle turnover, the easier—and less stressful—the process is. Read on for some easy steps you can take to develop an efficient turnover plan.
What Is Turnover?
Although turnover may not have been your first thought when you decided to become a landlord, it’s a vital aspect of your business.
Whether you call it tenant turnover, rental turnover, or apartment turnover, it all means the same thing: the process that occurs from the time one tenant decides to move out of your property to the time the next tenant moves in. We’ll go over each of these in more detail, but the turnover process typically includes:
- Ensuring the tenant moves out by the agreed-upon move-out date
- Collecting the final rent payment and/or fees from the tenant
- Conducting a move-out inspection
- Refurbishing the property for the next tenant, which could include cleaning, maintenance, and/or repairs
- Advertising your property
- Showing the property to prospective tenants
- Screening applicants
- Selecting tenants
- Getting the new tenants moved into the property
Since there are so many moving parts—and every day your property stays vacant can cost you money—it’s important to develop a process that allows you to perform all these duties as efficiently and effectively as possible. Ultimately, your goal with turnover is to quickly tie up any loose ends with your former tenant while ensuring the property is in optimal condition before the next tenant moves in.
Long turnover times can sometimes be unavoidable in the case of market downturns or the need for large-scale renovations. In most cases, however, it’s in your best interest to try to keep your vacancy periods as short as possible so you can maximize your property’s profitability.
The Turnover Process
The turnover process can generally be broken down into nine steps. However, keep in mind that every rental situation is unique, so it’s essential to have some flexibility. No matter how well you plan, it’s always a good idea to be prepared for the unexpected. For example, you may have a tenant who would like to pay to have the carpet steam cleaned so they receive the full security deposit back. If they provide proof the carpets were cleaned, you can cross that task off your list. Use the following steps as a guide only and make changes as needed.
- Receiving the Notice to Vacate
If your tenants have decided not to renew their lease, they should provide you with a written notice to vacate. A notice to vacate should be sent in advance of the lease end date, typically 30, 60, or 90 days ahead of time (depending on your policy). If you or the tenant decides to break the lease agreement before the agreed upon lease termination date, a notice to vacate is still required. The tenant should also include the best address to send the security deposit to.
Once you receive notice, you should confirm the time and date the tenant is expected to have all their belongings moved and return the keys. Keep the notice for your records and send them a written reply acknowledging that you’ve received it. Let them know that you’ll also be in touch to discuss the move-out process.
- Delivering the Move-Out Instructions
After receiving notice, your next step will be to deliver the move-out instructions. Although you may be used to handling move-outs, tenants often aren’t sure of how the process will go. The two most important things they should be aware of are the move-out inspection and the possibility that you’ll need to show the rental before they’ve finished moving. The move-out instructions should include information about both of these.
You may have already discussed the move-out inspection with them during the lease signing, but remind them that they’ll need to coordinate with you to determine a date and time for the inspection. Many landlords like to schedule move-out inspections approximately two weeks before the move-out date; this gives the tenant time to remove most of their belongings, which will give you a clearer view of any potential damage that could have occurred during the tenancy. You should also let them know that they’ll need to be prepared for you to show the property within 24 hours of receiving written notice.
- Scheduling Vendors
If you’ll need to work with vendors for repairs, maintenance, or cleaning, it’s best to schedule these as soon as you know the date and time the tenant plans to vacate the property. Service vendors are often booked out a few weeks in advance, so being proactive will help you stick to an efficient timeline. To shorten your turnover time, it’s generally best to have them come out a day or two after the move-out date.
- Advertising Your Property
Next, you’ll need to start generating interest in your rental. Keep in mind that Fair Housing laws apply to advertising, whether it’s done through traditional means or digital. This means you have to be very careful when wording your ads to ensure you’re not saying anything that could be considered discriminatory. Avoid suggesting your property is a good fit for a particular demographic (ex: “perfect for families” or “ideal for a college student”). Instead, focus on the features of the property, like stone countertops, all-new appliances, or a private backyard. Before you begin, it’s always a good idea to review the Fair Housing Act.
To cast the widest net, use several methods and platforms to advertise your property. Beyond traditional advertising, social media, and sites like Zillow or Craigslist, you can also use your network to find prospective tenants. Let the appropriate friends, family, and coworkers know you have an upcoming vacancy available.
- Conduct the Move-Out Inspection
The move-out inspection should be conducted with the tenant present. When you meet them at the property, bring a copy of your move-in inspection notes and photos so you’re able to compare the current state of the property with how it looked before the tenant moved in. Go through each room and evaluate each subcategory, such as paint, walls, windows, blinds, etc. Remember: you’re only looking for damage that goes beyond normal wear and tear. Things like faded paint or scuffed floors are a result of the property being used continuously over time and are not the tenant’s responsibility.
If the tenant still has furniture or other belongings at the property, it may make it difficult to see certain types of damage. Let the tenant know that if you discover anything new after these items are gone, you’ll add it to the inspection document as an addendum. Once the inspection is finished, both you and the tenant should date and sign the move-out inspection papers.
- Finding New Tenants
While your current tenant is in the process of moving, you should be working on finding a new tenant. Make sure to stay responsive to calls, emails, or any other inquiries you receive. Once you’ve narrowed down your pool of applicants, you’ll need to conduct interviews and tenant screening. After a few weeks, you should hopefully have found a suitable tenant who will be ready to move in once the property is ready to be rented out again.
- Collecting the Keys and the Final Inspection
On the day your current tenants move out, meet them at the property so you can collect the keys and perform a final inspection. This is essentially just a quick check to make sure there’s no new (or overlooked) damage that wasn’t recorded during the move-out inspection. Keep an eye out for things the tenant may be leaving behind, as well.
This is also an excellent time to confirm the tenant’s forwarding address. Make a list detailing the cost of any damages (if there are any) and subtract them from the security deposit. Then prepare the remainder of the security deposit to be returned to the tenant within the specified timeframe. This timeframe can vary depending on your state. For example, in California, landlords are required to return the full remainder of the security deposit within 21 days; in Texas, landlords have 30 days. Some states may also require you to pay interest on the security deposit if it isn’t returned on time, so be sure to read up on the specific laws for the state that your property is located in.
- Getting the Property Ready for the Next Tenant
Depending on whether you already have a new tenant lined up, you may have a very short window to get your property ready in time for them to move in—so check with your vendors to make sure that they’re still able to perform the work on the dates you have them scheduled to arrive. Now that the unit is empty, it should be easy for plumbers, electricians, and other contractors to get the place in excellent shape. This is also a good opportunity to make some additions, replacements, or upgrades to appliances, fixtures, or other features.
Before the next tenant moves in, you’ll want to make sure the property is ready. Here are some questions you should ask yourself:
- Is the property clean? This includes appliances, windows, windowsills, and blinds.
- Are the walls patched and re-painted?
- Does everything work properly—appliances, plumbing, HVAC, carbon monoxide alarms?
- The Move-In Inspection and Signing the Lease
Your property has come full circle, and it’s now time for the new tenants to move in. Before you hand over the keys, meet with them in person to conduct a move-in inspection, collect the security deposit, and go over the lease agreement. The move-in inspection allows you and the tenant to review the state of the property before the tenant moves in; it also sets the expectations of the condition the property should be in when the tenant eventually moves out. In addition, it allows you to fix any repairs that may have gone unnoticed or overlooked before the tenant moves in.
During the lease signing, take time to carefully go over each item and answer any questions the tenant might have. If anything is unclear in the lease, this is the time to get everyone on the same page. You want to make sure the tenant fully understands your expectations, policies, and procedures before they’re living at the property; this will help to prevent confusion or miscommunication in the future. Before turning the property over to them, make sure to have the tenants date and sign the lease and give them a copy so they can refer to it later if needed.
Handling Turnover with a Property Management Company
If you use a property management company, you’ll have less participation in the turnover process, but you should still make sure you’re familiar with how they handle turnover—and that they keep a tight timeline so you can maximize your profits. In addition, you’ll also want to know what their costs are for situations like vacancies and turnover periods.
If you have concerns that the property manager isn’t keeping a tight timeline, consider scheduling a time to sit down with them and review the steps they take to fill vacancies. They may not be scheduling services in advance or they may not be as invested in finding a new tenant as you would like. By addressing these issues and coming up with effective solutions, you can improve your turnover rate and create a better working relationship with your property management company.
Some other things you might consider reviewing with them are the costs and fees for vacancies and turnover. If you feel the company isn’t providing the level of service you’d expect for the fees, this is a good opportunity to renegotiate your terms.
The Costs of Turnover
As you know, turnover can be costly, so it’s essential to try to minimize these costs as much as possible. Here are a few factors that affect the costs of turnover:
- How long the property stays vacant
- How much money you’re losing in rent each month
- How much you’ve spent out-of-pocket on repairs
- How many of the repairs can be covered by the security deposit
- How much it costs to clean and repaint the property
Most landlords find their turnover cost is at least $1,000, but this can vary based on the location, how long it takes to rent the unit, and how much rent is lost while the property is vacant. If the property was kept in good condition throughout the tenancy, it won’t need much to get it ready for the next tenant—probably just some cleaning and a new coat of paint. If it needs renovations or upgrades, your turnover time could be a few weeks. On average, most properties take at least one or two weeks to turnover.
To keep everything on track, it can be helpful to make a list of everything that needs to be done at the property and how long it will take. Here are some considerations that can help you estimate your turnover time:
- Generally, the longer a tenant has lived at the property, the longer it will take to completely turn over the property.
- It will take up to one full day for your professionally steam-cleaned carpets to dry.
- Painting a single room can take between four to six hours; drying time can vary depending on the type of paint used.
- Having the whole property cleaned by a professional cleaning crew can take as little as two hours, but this is dependent on the size of the crew, the size of the property, and how much cleaning is needed.
- Changing locks should take less than an hour, especially if you’ve done it before.
- Changing air filters and testing alarms should take a few minutes each.
- If you’re having outside vendors perform repairs, ask for an estimate of how long it will take and factor this into your turnover time.
Reducing Tenant Turnover
With some planning and experience, you can handle turnovers quickly and efficiently, without affecting your bottom line.
An important factor in reducing tenant turnover is ensuring you’re getting the right tenants in your properties. While tenant screening and verifications can’t tell you how long a prospective tenant intends to stay, it can help you get a better idea of how long they’ve stayed at previous properties, whether they have a history of being a good tenant, if they have steady employment, and whether they’ll be able to pay their rent long-term.
TSCI offers comprehensive screening services to help you make the most informed decision for your properties. Our services are available online 24/7 and the cost of the screening is paid for by your applicants. Order your screenings today or feel free to contact us at (800) 523-2381.
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