For as many perks as there are to owning a rental property, one of the biggest downsides is experiencing turnover. Not everyone who looks into owning rental property takes into account the hassle that tenant turnover can bring. The good news is that there are plenty of ways to deal with turnover, and even ways that you can try to prevent it from occurring in the first place.
The non-recourse loan lenders at First Western Federal Savings Bank are here to tell all. Find out how to deal with renter turnover, and apply for a non-recourse loan for a vacation or tenant rental property today!
Why is renter turnover an issue?
A lot of people assume that because rental properties are always high in demand, it’s not hard to fill the space of your previous tenant. While that might be true in some areas, any property owner will tell you how great it is to have reliable tenants for multiple years, and here’s why:
Finding tenants takes time.
You have to market your property, set up showings, get background checks cleared (if that’s something you require) and applications processed, and figure out lease dates, all usually within the span of 30 days, more if you’re lucky. Any month that you don’t have tenants is a month that you’re losing money and missing out on the opportunity to generate income, which is why you constantly need to have renters staying at your place.
If someone stays in your property for two years or more, this saves you countless hours of trying to find someone new. High turnover means lots of time spent trying to get renters instead of investing that time into making your property look incredible and function well.
Your next renter might not be your favorite.
There are plenty of nearly-perfect renters out there, and plenty who completely miss the mark. The last thing you want is to sign a tenant who’s careless, who incurs damage to the property, who is an issue for the neighbors, and/or doesn’t pay their rent on time. A problem tenant can lead to your property becoming a financial liability — if you have to cover a lot of costs caused by a reckless renter, you could be spending thousands that could have otherwise been avoided by someone more calm and careful.
Not to mention, to say that dealing with eviction notices is a headache is an understatement. Yet every year, people take on tenants who they don’t have a good feeling about, but that they need to try and cover the expenses of owning a rental property. If you have a property with low turnover rate, you can avoid these situations entirely when you come across a great tenant who stays put.
Turnover is expensive.
Just like businesses who lose valuable employees are losing financial assets to their company, the same is true for property owners. Like we started to talk about, it can be a huge financial burden if that brand new oven you just installed gets trashed and needs hefty repairs after only a few months.
But even with a perfect tenant, there will likely be lots to clean and fix and repair after they move out. You’ll need to get things taken care of before the next tenant comes along, so these expenses can quickly become annual ones instead of expenses that are paid for every other year or every few years.
In our next blog, we’ll talk about some of the ways in which you can address the problem of turnover. As much of a pain as it can be, there are fortunately plenty of ways that you can deal with it, and either manage high turnover rates, or eliminate high turnover entirely — our non-recourse loan lenders are happy to give you some guidance that could make owning a rental property easier.
Whether looking to own a vacation rental or a long-term tenant rental, our lenders are here to help. We also offer refinancing options and can give you plenty of information on utilizing your self-directed IRA as an investment tool. Stay tuned until our next turnover blog, and apply with First Western Federal Savings Bank for a non-recourse loan that can set your financial goals in motion.