Apartment turnover costs are an inevitable part of the rental housing business. Turnover is very expensive. Controlled studies have shown that an apartment complex spends about three times the average monthly rent every time a unit turns over. This figure includes clean up and repair expenses, advertising, lost rent, and many other hidden expenses. Reduce your turnover and you’ll significantly reduce your operating costs.   And make more money…even with a lower rent!

The first step to reducing turnover costs is to reduce turnover. This can be done by conscious attention to resident retention. We can minimize the rate of turnover through careful screening and selection, fair rent pricing, constant product updates, and cheerful service and follow-through. However, some turnover is inevitable. Do you have a strategy to minimize your downtime and maximize your re-rental? Here are some suggestions.

Reduce Your Costs on the Way In

The first way to reduce your costs from turnover is to make sure you are not paying for excess damage when your prior tenant leaves. The best way to reduce your costs when a resident moves out is to plan for this at move in.

You need to:

• Screen carefully
• Have a good lease with specific charges for costs beyond normal wear and tear or “cost of doing business” items.
• Have an adequate security deposit
• Do a move-in check list
• Advise your tenants what they can do to get their deposit back

Having a move in checklist, signed by the new resident, is extremely important. It is a legal document showing the condition of the apartment as it was when they moved in. It is your best insurance, aside from a large security deposit, to making sure your damage expenses are covered.

You should also take ‘before and after’ photos of the apartment. Some people even do a walk through video. When tenants move in, take at least 2 shots per room. Then later, if there’s damage, just take photos of the damaged areas to compare to the “before”.   If your need to perform repairs is later disputed in court, nothing helps more than graphic photos.

Plan Ahead to Reduce Down Time

Many people wait until the vacancy is created, the apartment is re-painted, and they’ve lost 2 weeks rent repairing the place before they ever show the vacant apartment. Then, they lose another two weeks or more with showings and down time before the new tenant can move in. Sometimes this is necessary – especially when you are doing a major rehab or the prior tenant trashed the place. However, there are some ways to reduce this down time.

Market the unit – or a comparable unit that shows well before the tenant moves out. If your existing tenant is neat, start showing their apartment as soon as they’ve given you a 30 day notice to vacate. You might get the place re-rented before they’ve even moved out. If their unit doesn’t show so well, work with another tenant in the building who has a similar floor plan. We sometimes offer our neatest residents a moderate rent reduction (i.e. $50 to $100 off their rent) to allow us to use their apartment as a ‘model’. This gives a good impression of what the apartment can or will be to a prospect. We have rented many apartments at good rents off of this low cost ‘model’ concept.

Do a walk-through evaluation/plan before the resident moves out. You’ve typically got 30 days from the time you know a resident is leaving until the unit goes vacant. Don’t waste this time! Plan what you’ll be doing. Need new carpet? – Get the carpet guy out to measure now. Tub surround looks bad? Go out and order or purchase the new one now. Most managers wait until the apartment is empty to begin anything. But at that point every day costs you money. Do it now!

Explore Alternatives. Are you finding the same problems every time tenants move out? Is there something you can do to change this? For example, if the linoleum in your dining areas is regularly gouged from resident’s chairs, maybe it’s time to install either a higher grade vinyl or to start giving new residents felt cushions to put under their chair and table legs.

Sometimes we will do an expensive initial turnover, in order for subsequent ones to be much less. In one apartment building, we went in and upgraded the electrical in every room, modernized the kitchens, and tore out the carpets to refinish the hardwood floors which were below. It cost almost $4,000 per unit the first time. Now, however, with no carpets to clean or replace, sinks that can’t chip, a commercial vinyl which has the pattern all the way through (as opposed to just a “wear surface” pattern) and a standard paint color that is easily touched up, our turnover costs average under $250 each vacancy.

Plan to Work Smart and Fast

Once you know when your resident is moving out and you’ve walked through their apartment, you can start planning to work efficiently. Here are a few tips:

Have vendors lined up and pre-scheduled. People are busy these days. You may need to give preferred vendors anywhere from a few days to a few weeks lead time. Also, if you are ordering a special carpet, vinyl, or appliance, you may also need adequate lead time. Plan for this before your apartment goes vacant!

Standardize your products and systems. It’s cheaper and faster to prepare a vacant apartment when you can easily replace a missing or broken part. Standard paints make for easy touch up. Standard light fixtures make for easy replacement of a broken globe. Standardization also gives the apartment a more finished and uniform look.

Have you ever found yourself in the position of looking for one cabinet door to match the others, only to find that style is no longer made? Sometimes “cannibalization” makes sense. This means taking parts from one unit to use for repairs on all the other units. You then fully remodel the stripped down unit to get the market’s maximum rent. For example, this way you may have 15 or 20 cabinet doors that you can use to repair many apartments – for the cost of ONE new set of cabinets.

Your products and processes should be analyzed to see if there is a way to save money and/or create higher quality. For example:

• Verticals on the windows stay cleaner than mini blinds – and its easy to replace a single slat
• The manager, rather then the painter, should buy the paint – for color and quality control.
• Gluing an extra piece of vinyl to the base of the sink cabinet prevents the cabinet from rotting if a tenant allows a leak to go unchecked.

Create a “make ready” checklist. Have the manager or your maintenance person first walk through with a checklist. Then do the work and have your manager sign off. Your checklist should force the manager to go over the many common maintenance items you find on a turnover. These include:

• Broken or loose doorknobs on cabinets and closet doors
• Loose closet shelving or rods
• Loose shower rods, towel bars, and hooks
• Leaky faucets or toilets
• Clogged faucet aerators
• Clogged drains
• Burned out light bulbs
• Broken electrical switches
• Noisy vent fans
• Tub and shower caulking
• Dirty filters
• And much, much more.

When you go to Jiffy Lube, they have a checklist their technicians walk through to make sure they hit everything. Your maintenance people should do the same.

Present Your Apartment at its Best

You will always attract the best tenants and get the most rent from a dwelling that shows well and smells good. Cleaning doesn’t cost much – yet it will make a huge difference in who you attract and in the rent you get.

Always remember key areas that your tenants will focus on. All the new carpet and paint in the world isn’t going to help very much if your apartment has a filthy kitchen and bathroom.

Make sure the appliances are clean (and working), the stove hood is clean or new, and the cabinets are clean – inside and out. Clean the showers, tubs, toilets, sinks, mirrors, and medicine chests. Dust the ceiling for cobwebs. You need to treat this apartment like you are getting it ready for your mother to move in!

If the bathroom needs more caulking, a new toilet seat, or repairing of seals – take care of it. For inspiration, look at what the hotels do. You don’t have to put those little soaps out or put that seal around the toilet but you want to make the place feel clean and untouched – even though everyone knows its been lived in for 30 years many different tenants.

Reducing the cost of turnover is one of the best ways to increase your cash flow. Remember, you not only reduce turnover costs by following these steps – you can get top dollar for your rental units when they show well. Reducing down time and planning repairs is money in your pocket – not your lender’s.