I have been working on an apartment turn over the past couple of weeks. The previous tenants moved out on 3/3, new tenants are moving in on 3/15. Only a twelve-day vacancy period. So, with 24 units I own, we are 100% full again. This is what a typical apartment turn might be like, for an average renter. The previous renter profile. The tenant was a married couple, with three kids. Two of the kids were 6 years old and younger. Slightly below average credit scores, 609 and 645. The income was above average, the husband made $25 per hour; the wife also had a job. I would say they were a $70K income household. Over 6x the rent in household income, this is very good. They had a Labrador and a cat for pets.
The tenants were in the apartment for 29 months. They gave proper notice and even paid for the extra three days they were in the apartment. From a payment perspective, every day they were in was paid.
The Premise. The rent was $1,050 when they moved in, and was adjusted to $1,075 about a year and a half into their lease. They paid well the first year, but started having late payments, combined with a $75 late fee, sometime in their second year. I considered them one of my weak links due to their late payments, but the late fee added to the profitability.
After living there for that amount of time, and the fact they let the kids run rough-shod throughout the apartment, the apartment was a mess. The kids had written on virtually every wall. Marks on the refrigerator and even on the oak stained woodwork. I knew I would need some time between tenants to turn the apartment. Replace some door knobs, mini-blinds and vertical blinds, and some other odds and ends.
The Turnover. The family had too much stuff for the apartment. The garage was packed full. The house was full of kids’ toys and other ‘stuff’. It was virtually ‘un-showable’. I started advertising the apartment ~5-6 weeks prior to their move out. I knew it would be a tough sell. After a few showings, I could tell it would not rent to a quality tenant until they were out.
I prepped ahead of time by purchasing 5-gallons of paint from Sherwin Williams. Pro Mar 200, Semi-gloss. I told the renters where they could buy refrigerator door shelves to replace the ones that their kids broke. All three needed replacement. I gave the tenants an extra garbage barrel so that they could throw out many items. I explained where they could drop off recycling items and old electronics, free of charge.
As my previous posts indicate, I gear for fast turnovers. I work full-time, so I do not have a lot of time to spend turning apartments if I want to maximize revenue. All paints in the apartment are semi-gloss. Most of the kids writing on the walls were cleaned off, although not totally. They needed a coat of paint over the top of them. I do not allow smoking in my apartments.
All my apartments are painted in the same colors. Any remaining items could be touched up. A normal paint jobs takes ~6 gallons of paint, and ~10 hours. A painter charges ~$450, plus the cost of paint. A touch-up looks almost identical, and only costs $20 and two hours. Apartments turns need to be fast, cost effective and efficient.
The New Tenants. As I always do, I advertise on-line. I use Craig’s and other on-line web sites. I have virtual tours posted on YouTube. Anyone, from anywhere in the country, can see the apartment. I had a couple from Colorado inquire and pay a holding fee, to rent the place on 3/15. They did this sight-unseen. The new couple both had a credit score of 750+ and jobs making over $100K annually. They were approved to move in, after they committed $1,000 as a move in deposit. If they bail, I keep the $1,000. They had applied to another place, in addition to mine, but did not put a deposit down. That landlord loses, I win. The rent for the new tenants is $1,150, an additional $75 per month or $900 per year.
So, approximate total cost of the turnover is $1,400. This is for a relatively easy turnover. If I would have hired out the cleaning and maintenance items, it would have been $750 to $1,000 more. A dollar saved is better than a dollar earned. A dollar saved is tax-free!
Vacancy $550, Carpet $750, Supplies and parts ~$100
I also had a few man hours spent. I could not charge the tenants for all of the hours, but Cleaning and Maintenance (~30-40 hours spent). This unit, assuming the new lease goes to the end, has only been vacant about one month since I purchased the property in 2008.
This is the fourth tenant I have had it the unit. One month out of 5+ years is less than a 2% vacancy rate.