Most St. Louis real estate investors know that vacancy can cost a lot of money. When your property isn’t occupied, you’re not earning any rent. You’re also paying for rental property maintenance, upgrades, cleaning, landscaping, and extra security.
Tenant turnovers are often even more expensive than a simple vacancy.
The true cost of tenant turnovers can be harrowing. However, you can keep the costs to a minimum if you have a plan in place, some great vendors in your network, and a commitment to working quickly to re-rent your property.
Here are the costs you can expect when you’re moving one tenant out and preparing for another to move in.
Vacancy Cost with Turnovers
The first major cost you’ll encounter is vacancy. During the turnover period, you don’t have any rent coming in. That’s going to hurt your cash flow and it’s also going to be a bit of a drain on your long-term ROI. Your property’s profitability depends on consistent rental income.
Keeping the Lights on Comes at a Cost
There’s also the cost of utilities to consider. When your tenants aren’t in place and there’s no one else to continue paying the electric bill, the water bill, and the gas and trash bills, you have to cover them yourself as a property owner. You cannot leave everything turned off. When vendors and contractors are inside the home, they’ll need electricity. When prospective tenants come to see the home, they’ll want to turn on lights and sinks.
Turnover Maintenance and Repairs
During the turnover period, you’ll also incur the cost of making the property ready for the St. Louis rental market.
You’ll have to take care of the general wear and tear items that are found in your property between tenants. These are things that you are financially responsible for; you cannot use the previous tenant’s security deposit to pay for them. You may have to paint the walls, for example, or steam-clean the carpets. Those small holes in the walls left by nails are your responsibility, and so are the scuff marks that may show up on walls and floors.
Upgrades and Updates
To remain competitive in the St. Louis rental market, your property has to be modern and inviting. This might require some updates and upgrades.
The best time to take care of these things are during a turnover period. There isn’t a tenant in place, and you have the time and space to make minor renovations. These updates will likely help you earn more in rent, but there is a cost associated with making them. Choose the most cost-efficient things to improve, such as faucets and drawer pulls instead of a complete kitchen makeover. Replacing one old appliance with something new and energy-efficient will make a big difference. Budget for these things when you’re planning your turnover.
Turnover Cleaning Costs
Once you’ve completed all the work that needs to be done, you’ll want to have professional cleaners go through the property and completely make it shine. This is the best way to market your property to new tenants.
Depending on your property, a turnover could cost a few hundred dollars or the equivalent of four months’ rent. It really depends.
For some help planning and budgeting, contact us at Amoso Properties. We can help you keep your turnover costs to a minimum.