With my 24+ units, tenant turnover is inevitable. In my case, it happens every few months, to the tune of six to eight per year. Tenant turnover is not all that bad, if you get great tenants to start with. It’s when you have a marginal tenant that apartment turnover is a lot of work. My tenant in one of my buildings sent me the dreaded tenant turnover email. Sometimes I get a text, sometimes an email; sometimes it’s just verbal if they see me in the area. I have yet to get a formal move out letter in writing, even though the lease says it must be in writing.
To enforce a written letter with great tenants is unnecessary. If a tenant is breaking the lease mid-term, I will give them a lease termination form, as I don’t want two ‘live’ leases on the same apartment. Or if I think I will need to get the tenants to move, and I want them out, I will also use one.
So here is how the email went.
“I recently got accepted into Grad School, so we are moving to Wisconsin. Unfortunately this means we will not be renewing our lease at the end of June. So our last day in the apartment will be June 30th.
We will make sure to have it cleaned out before then. We have truly enjoyed living here and are very sad to leave. The community is wonderful and we have yet to find such a wonderful apartment where we are moving.
We also really appreciate how helpful you have been and the maintenance staff. If you have any questions please let us know. Thank you so much for renting to us.”
These were great tenants. Whenever I had a showing in another unit in the building, I made it a point to knock on their door and let the prospective tenants talk to an existing tenant. They always said great things about the apartment, and I think I may have rented once or twice because of it. I kept up on the maintenance, and any reference to ‘staff’ was me, or a mistype.
The Credit scores for these people were 644 and 625. Slightly below average, but both were recent college graduates. Neither one had a single negative credit account on their reports. Both had 12+ accounts. Often you see younger people with 700+ credit scores, but it is easy to have great credit when you only have two accounts and have only had them for six months…
Both were professionals, right out of college. One was a software engineer, the other a purchasing person. Between the both of them, they made at least $75K per year, more than seven times the $975 monthly rent.
I never had a late payment from these people during the two years they were in my apartment. They fulfilled the lease, 100%. They gave me over 60-days’ notice, even though the lease says 45 days.
I am not sure what condition the apartment will be in when they move. I suspect that it will be 100% move-in ready by the time they leave. I have a $1,000 security deposit that says it will be move-in ready, if they want the money back. I have no doubts for these tenants, the place is spotless otherwise.
So, in the next few days, I will deliver my move-out checklist, and a C/D with the 66 pictures and video that I took just prior to them moving in. The pictures will help them remember what condition the apartment was in on their first day. I will start an ad in Postlets, and begin the on-line marketing process. I do not advertise in a hard copy newspaper, it is too expensive, and people without a computer are generally not great tenants.
At some point soon, I will start a Craig’s list ad. The rent will be slightly higher, and will be back to market priced. I had not raised the rent in two years, so I will probably start at $1,025.
I will set up some times that I can show the apartment with the current tenants, typically a couple of days during the week between 6:00 PM and 7:30 PM, and one weekend day between 11 and 4 PM.
I do not show properties during the day; I work my ‘real’ job during the day. I also want people that work a normal shift, just like I do. Night shift workers can be a problem in an apartment full of day workers, and people that do not work have to come out when I am available. If they rather party during those times, so be it. If the bus doesn’t run as often between those times, it is not my concern.
I pre-screen the tenants over the phone and in emails, so I do not bother existing tenants with the new ones. When I show an apartment, I have generally talked to 20+ people. If I show the apartment to 3 or 4 qualified people and I do not get an application, I will lower the price. It really is that simple.
What is your process for moving out of your rental, or preparing your rental property for new tenants?
“People without a computer are generally not great tenants.”- Never thought about it but I think it actually makes sense.
I like your process of preparing your rental property. As a landlord with a lot of units I can imagine you just want to rent to people you can bear with and have no time to deal with troubled tenants.
Thank you for the comment!
I am sure that there are some great tenants without computers, and I should probably not make generalizations, but today everyone has a computer. Even a smart phone. Maybe there are some older folks without them, but they generally have people that can help. People without enough money to buy one are suspect, but definition. And if I need to contact someone, I usually text or email first. They need to be able to receive those communications. It’s 2014, not 1980.
I am pretty busy. I do not have time for nonsense. If I had one bad tenant out of 100, that tenant would take more time than all of the other tenants combined. A bad tenant can poison the unit and cause all of your profitability to be given back.
Nice explanation of how you go about finding new tenants and tying loose ends with the departing tenants. We are on our second renter of our basement. We’ve only owned our house for less than a year. Since we share common storage/laundry place in our apartment we so far have only really wanted to rent to friends or acquaintances of ours. It’s a bit of a different setup where I would rather it be empty than to rent to the wrong person. It would be much easier if our current tenant renews, but you never know with basement rentals. They may have been looking and found a better place. I don’t think basement rentals are bad and I would have loved a similar setup as I have now when I was in college or if I was single, but I know some only like to have a basement rental for a short period of time. Anyway I’m rambling and didn’t answer your original question haha so I guess I’ll have to start looking into it more if our current renter doesn’t renew.
Thanks for the comment DC!
Basement rentals are a different deal. Not much different than a roommate, but Fair Housing rules still apply. And you want to make sure that if you need a permit, you have one. With a friend, not much can go wrong… If you are hanging around the right crowd, that is.
But if you are renting to a open market renter, things can get dicey quick if you are not 100% legal and you need to evict.
Good luck! If you have any questions, feel free to email me.
Great post! Insightful for my wife and me. Tenant turnover can be dreadful. Having a cash reserve gives me the security of knowing that I will be ok if the home doesn’t rent soon. Giving me more time to find a good tenant. I have been very fortunate with tenants so far. So, with having as many units as you have, what percentage of the deposit do you return on average? I know it’s common for places to always come up with reasons not to give the deposit back at all, but it sounds like you try to return it.
Thank you for the comment!
I try to always return the full deposit, but often tenants lack the motivation to clean. I send out a sheet that lists the things to clean, and say it takes 12 to 20 hours to clean. If they don’t want to clean, I am happy to take their money. If they have the flexibility to leave a couple of days early, I am not near as harsh on the deposit.
Generally, people with a higher credit score get the most deposit back, as they understand what it takes to get it back.
I have a question about the order of the logistics of showing the apartment to prospective tenants. Do you only show to people that you have done credit checks and reference checks on first? Or is the pre-screening that you do to get 3 or 4 qualified people just based on reviewing emails from them and their phone calls? Then, once you get an application the credit and reference checks are completed.
Through this pre-screening process, if you find them to not be suitable, how do you tell them they can’t see the apartment, even if they are interested?
I will pre-screen verbally, but I have to take the tenants word for it. If they say they have enough income, or no criminal background, there is not much I can do. but the proof is when they have to put up money for an application.
I have returned about 20 emails so far from people that have inquired off the web in just a few days Only one responded that they are still interested. They have a 200lb dog, and another dog, so I am not as excited about them. But they do say they have 700+ credit scores and 60k+ in household income, so I show it. I can still reject for the dog after they apply, if they apply. I would not take the application if I decide I do not want the dog though. If they tell me their situation, and I take the application fee, I would give back the money if I later decided it would not work. If they forget about a criminal event, I keep the app fee.
If they are not suitable, most people do not press for an appointment. Or I just say something to the effect of “it does not appear that this will work, Good luck in your search”.
I will pre-screen, and have to take the tenants word for it. If they say they have enough income, or no criminal background, there is not much I can do. but the proof is when they have to put up money for an application.
I have returned about 20 emails so far from people that have inquired off the web in just a few days Only one responded that they are still interested. They have a 200lb dog, and another dog, so I am not as excited about them. But they do say they have 700+ credit scores and 60k+ in household income, so I show it. I can still reject for the dog after they apply, if they apply. I would not take the application if I decide I do not want the dog though. If they tell me their situation, and I take the application fee, I would give back the money if I later decided it would not work. If they forget about a criminal event, I keep the app fee.
If they are not suitable, most people do not press for an appointment. Or I just say something to the effect of “it does not appear that this will work, Good luck in your search”.
In my brief landlord career, getting the unit ready has been about trying different methods. For our first property, we had recently moved out so the place was in tip top shape, the only thing needed because of the high traffic and great neighborhood only needed a sign and phone number.
Our other property we went with a cleaning lady, one of the reasons was this was after a major rehab of the unit and our first time renting the unit, the next unit we rented we cleaned ourselves and saved the $100-$150.
We have used Zillow which posts to Craigslist, took about 12-20 pictures, it was the best after attempting to do my own Craigslist ad and link to a blog post.
Thank you for the comment.
I use Postlets, and Craig’s mainly. Postlet’s puts out to Zillow, hot pads, and a few other places. If I have multiple vacancies, I use rentBits, which posts to 100+ sites, but costs $109 or something close to that.
If you have a vacancy, you need to fill it fast to make money. Read this post too.
Good Article….This is one of the things I hate in LL biz….losing an exceptional tenant…Thank you for mentioning that you may speak to 20 folks before you show the place to one person. I have been doing this a while and I find this the most frustrating…ill prepared applicants…Thanks for the article!
Thank you for the comment!
If you want great tenants, you have to sift through a few of them.
Thanks for the breakdown, I’ve only rented to one tenant(month 9 of a 2 year lease) but I made sure to pre-screen and then have them fill out an app to prove everything. I listed the place on CL about 2 months out for $1,900 and only got 2-3 inquiries within 2 weeks. Only one(the guy I ended up renting to) was serious and I ended up having him sign the lease about 1.5 months out. I’m guessing that I priced it too high by $100-$200 since I only got a few inquiries in a 2 week period in a high density area. Thoughts?
Btw, what do you think about retired tenants? The guy I’m renting to has only rental prop income but he had a great credit score(high 700’s) and I got a good feel from talking to him in person. I also figured he would be a good tenant since he owned property himself and so far I’ve been right – he’s taken care of a few small fixes here and there without needing my help. I didn’t think about this when I rented to him but it’s also been nice to have someone retired as a tenant since he’s available all the time if I need to send out maintenance men(I’m 1-1.5 hours away w/o traffic).
Sounds pretty similar to our experience with tenants – we have one good set that will be moving out on May 31 and we’re sad to see them go (our string quartet of renters will be down to a duo). The only thing we do differently is offer all of our network of past and current tenants a cash bonus if they find a new tenant that meets our approval and is ready to start a lease without any lost time in turnover. The cash bonus has usually been on the order of about 1/3 month of rent (~$250 or so), and that’s plenty of incentive for the students that we like as renters to ask their friends, who also tend to be good tenants.
Thank you for the comment!
The cash bonus works great when you have/had great tenants in place. Odds are, their friends have similar habbits to them. Be sure to do a proper screening, even if the are friends of great tenants. Generally, that is a good way to get decent leads though.
But sometimes people do not know what their friends financial condition is, or they sometimes try to help friends that are having a hard time after a recent eviction, break up, or job los. All of which would be a reason to shy away from a seeminbly good person, as their credit and income may not up to a level that it was, just prior to the event.
I like the idea of sending the current tenant pictures and video of the original move in condition. I’ll have to try that! Thanks.
Thank you for reading.
I have gotten lazy and not given them out lately, but it is a great idea.