How Do We Quantify the Value of a Turn
Vacant properties are an issue because of the obvious loss to your monthly income, then after adding in other expenditures to maintain and insure the property, that number added up over time can escalate damage in a homeowner’s pocket.
In 2018, the U.S. national medium rent for a two-bedroom apartment was $1,255. That number increases with the number of bedrooms, bathrooms, and the location. In the southern states the average rent for a two-bedroom apartment is around $1,700, with a three-bedroom property’s rent going around $1,835.
Vacant properties are more likely to be vandalized and insurance companies know this. Most insurance companies will not insure a property after 30 days of it sitting vacant. In order to protect your home, you as the owner will have to get vacant property insurance which is much more expensive than homeowner/landlord insurance. This number might be upwards of $180 each month!
Considering the cost of the average vacant rental property could easily look like this:
- Monthly mortgage payment (Median monthly payment according to the U.S. Census Bureau): $1,030
- Property tax: $150
- Vacant property insurance: $180
- Home warranty: $50
- Utilities: $100
- Lawn care: $50
- Total Monthly Expenses: $1,569
- Carpet cleaning: $55
- Window cleaning: $50
- Oven cleaning: $15
- Home interior deep cleaning services: $90
- Total One-Time Costs: $210
These numbers are large, and this is before figuring in the absence of rent that a resident would typically be paying you each month. Adding up the first month of expenses (before needing vacant property insurance) $1,389, the cost of rent you’re no longer getting in monthly revenue $1,255, and the one-time charges of $210, totals to a grand $2,854.
That’s almost $3,000 lost if the unit is not filled within 30 days!
After one month, the monthly expenses (with the vacant property insurance) $1,559 plus the loss of the typical monthly rent (the U.S. national medium) $1,255, totals to $2,824. That’s just $30 less than the first month! To get a further glimpse of the reality of what vacant properties can cost, the first month’s grand total of $2,854 broke down to the total cost per day is $95.13.
The bottom line is nobody wants a $100 bill leaving their pocket every day, but more happy residents will lead to more lease renewals, which will ultimately lead to happy homeowners. We strive at Property Meld to ensure that your residents are stress free when dealing with maintenance concerns, and with a statistic of 87% increase in resident satisfaction, you can relax knowing we’re here to help.
Written by Kyle Graves
U.S. Census Bureau, abodo.com, hasslefreehomesmemphis.com