What is a Rental Turnover and the 3 Effects of Poor Processes

Rental Turnover

80% of rental turnover happens in the spring and summer. So, leases will end, residents will move out, and you’ll be facing the financial weight of a costly turnover between $1,000—$2,500 per unit.

So tell us, are you prepared to face the stress of the turnover season?

If not, you and your staff will be scrambling to keep track of vendors’ repairs while keeping a grasp of daily business operations. With the growing concern of limited staff capacity, you’ll need to make the turnover process as simple as possible.

 

What is a rental turnover / make-ready? 

A rental turnover, or make-ready, is the process of preparing a rental for a new resident after the previous resident moves out. You’ll discover that make-readies and turnovers are interchangeable terms in the property management industry.

The turnover period begins with the departing residents’ move-out inspection. Typically, the average turnover period is 10 to 14 days, sometimes even lasting as long as 4 weeks! During this time, property management companies identify any damage or repairs. 

Then, the property management company requests repair estimates from multiple vendors before preparing the unit. 

These repairs can include replacing the carpet, painting the walls, updating electrical, and more.

The process ends after the property’s final quality inspection. The repairs are complete, and the unit is declared ready for rent. 

 

The 3 negative effects of poor rental turnover processes  

1. Your owners and investors lose income with frequent vacancy gaps

Let’s put this into perspective. If your property owner has 40 single-family homes with an average 14-day turnover period, your owners can lose thousands of dollars in income due to the vacancy gap.

Here’s the math:

  • 14 days vacant / 365 days = 3.8%
  • Monthly Gross potential rental income = 40 single family homes x $1,600 per month = $64,000. 
  • Vacancy gap expense = 3.8% x $64,000 = $2,434 lost to the vacancy gap.

But that isn’t all. We also quantify the value of your turn to other tasks like…

  • Move-out inspections
  • Repairs/Rehabs
  • Re-listing/Marketing
  • Showings/Renter approvals
  • Move-in inspections

Every day a unit is empty, your owners and investors are losing money.

2. Time-consuming tasks cost you 

We know that many businesses are struggling with staffing. Rental turnover tasks can be time-consuming and mundane for your staff. 

In fact, workers spend approximately 520 hours a year on repetitive tasks. This includes follow-up calls, scheduling maintenance requests, invoice processing, repair estimates, and more.

Let’s say one of your internal staff makes $20 an hour following up on make-ready emails and phone calls. That is $10,400 a year (520 hours a year x $20/hour) on repetitive tasks that is bring you no value. Use your staffs’ time wisely by allowing them to help grow your portfolio by acquiring new owners and residents.

3. Increased owner churn risk

It may surprise you to learn that there is a direct connection between resident and owner churn. Actually, poor, slow maintenance on major repairs is the number one reason residents leave. When your residents have a positive maintenance experience, your residents are more likely to renew. Also, you reduce maintenance costs through your preventative maintenance efforts, which can result in owner renewal.

Table 1 illustrates the financial impact of owner churn on Lifetime Value (LTV). 

LTV is a metric that analyzes the total revenue you earn from an owner over time. value of a customer based on the amount of time with the organization.

LTV Owner churn

You must keep your turnovers to a minimum so you can improve owner satisfaction and retention year after year. 

Take control of your turnover process before it controls you. The longer you stay complacent – the more you will be paying in the long run. 

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