As a professional property management company, we have found that one of the most difficult concepts for rental property owners to grasp is the true cost of vacancy. Investors who have been in the rental game for a while understand that in almost all cases, the greatest expense they will experience over the life of their investment property will be the cost of vacancy due to lost rent and preparing the property between tenants. 100% of our managed properties have or will go through a vacancy and prep period. Based upon our experience in managing this process literally thousands of times, we provide the following advice to our property owners to help minimize the costs associated with turning around the property, and to expedite the placement of a new tenant to begin collecting rental income again.
#1: Start Today
The worst thing that can be done is to wait for any particular task to be completed before starting on the next. The game plan should be in place the day the tenant vacates the property. Vendors should be ready to come in and provide quotes; marketing efforts should be getting put into place; and a firm deadline for completion of the necessary clean-up/repairs should be determined.
#2: Get Your Utilities in Order
Make sure your utility accounts are in order as soon as your tenant leaves. Nothing is as frustrating as having the carpet cleaners or painters show up to an empty property with the electricity or water shut off because the accounts did not get transitioned properly. This can add days or weeks to your vacancy time.
#3: Plan for Paint
This is an area where we see most owners overspend. Paint needs to be carefully examined and a strategy determined to minimize costs and address necessary issues. Very rarely does an entire home interior require painting top-to-bottom between tenants.
- Ceilings do not get abused like walls do. Unless your tenants are heavy smokers or very messy cooks, you can often get away without repainting the ceilings, eliminating quite a bit of cost.
- Consider painting walls instead of whole rooms. This is especially the case in bedrooms and other fully enclosed rooms. In many rooms, a piece of furniture such as a bed or sofa rubbing against a single wall does most or all of the damage to the paint in that room. Consider making that wall an accent wall if you can’t match the color. Only if you kept the paint or can match your colors, then paint that entire wall. Try not to “touch up” areas smaller than an entire wall unless your paint matches exactly—paint the entire wall instead.
- Never paint anything flat white except for your ceiling. Many people think that white paint makes a home look clean. It does—until you touch it, then it doesn’t look so clean. If you must use white, only use a semi-gloss or other cleanable finish in bathroom or kitchen areas if desired. Otherwise, stay away from white walls in rentals. If you are not doing it yourself, then get a couple of quotes. Painting labor costs vary greatly, especially in this economy. There is no shortage of painters searching for interior painting jobs. You have control. Negotiate a good price, especially if this is a small job.
By making good decisions regarding paint, we commonly turn a $3000-5000 whole house painting proposal into $300-$500 worth of walls and touch-up paint. These properties end up just as clean and marketable as they would have been if the whole home had been painted. We also cut days off of our vacancy time by eliminating scheduling issues. The lesson is not to go crazy with the paint. Make choices that will save or make you money.
#4: Tackle Carpet & Flooring
If you are fortunate enough to have rentals with hardwoods or laminate throughout, then you don’t have to deal with the pain of rental carpeting. However, if your rentals are like ours, then a large majority of them are partially or fully carpeted. There are a wide variety of opinions regarding what constitutes “acceptable” rental carpeting. Do not utilize your own living standards to determine whether you should replace your carpeting. Many owners do exactly this and replace carpet that has 1-2 rent cycles left in it. Get the most out of your carpeting, and do not replace it unnecessarily.
- Clean it first. Some look at it as a waste of money to clean carpet that may eventually be replaced. However, we have seen literally hundreds of cases where we believed carpets to be unsalvageable, then we had them professionally cleaned, and they looked nearly new once the cleaners were done. Good professional carpet cleaners utilize some pretty strong cleaning agents that get out dirt and stains that you may not think it’s possible to remove. Many can also repair or patch burn marks or persistent stains. The average cost of our carpet cleanings is $200 vs. the average carpet replacement at $2500. It is almost always a good bet to try to clean it first.
- If you must replace it, go cheap. We don’t advocate throwing in the lowest quality product for the sake of being cheap, but there is no certainty that you will not be replacing this carpet again for your next tenant. It certainly won’t last forever, and typical rental carpeting lasts 2-3 tenants. We generally purchase inexpensive mid-grade rental carpet and go with upgraded padding to account for the lack of cushion/thickness. Clean and new is much more important than comfort when it comes to most rentals outside of the high-end market.
- Be careful with Berber. It is a good product, and many people like the durability; but Berber has two big drawbacks in rentals:
- It does not clean well at all. Even normal-traffic dirt that will clean out of standard carpeting will not clean out of a light-colored Berber.
- Berber snags. Most of the Berber I see in rentals has at least one damaged area caused by furniture snagging the carpet. This is generally not repairable.
- Consider lower-maintenance flooring. Laminate, tile, and hardwoods are not cheap; but over the life of a rental, they can save thousands in repair and replacement costs. If you have the option to lay flooring other than carpet, you should at least give it some consideration.
#5: Make General Repairs
I won’t spend too much time on this section as it is pretty clear that broken items need to be fixed. We just caution owners not to overlook the small items. We want to be sure that all of the doors open and close easily, that locks lock, windows open and close, faucets don’t leak, screens are not torn, etc. Sending a handyman through the property for a few hours to check and address these minor issues may save literally hundreds of dollars of service calls and hours of time to coordinate work once a tenant is in place. It is always easier and cheaper to complete repairs in a vacant unit rather than to deal with those issues once the tenant is in the property.
#6: Clean the Unit
We are routinely asked by new rental property owners what the most important factor is that renters want to see when they come to view a rental property that we have on the market. They expect that location, room sizes, or staging is going to be my response. I always give them the same answer: The most important thing that renters are looking for today is a clean home. There are a lot of rentals available in almost every geographic area. The single most important factor (even more than rental price) that we see between the homes that rent quickly and those that sit on the market for extended periods of time is cleanliness.
We strongly recommend having every property that we lease professionally cleaned once carpet, paint, and general repairs are complete. Within our suburban Chicago market, the average cost to clean a home from top to bottom is $150-$200. This is a tiny investment compared to the benefits of having a home ready to market and show with gleaming bathrooms, cabinets, and appliances. That $150 can literally cut weeks or months off of the time the property sits vacant by helping to generate more applications from interested applicants. If you have very limited funds and can only choose one thing to do to a rental property cosmetically, have it professionally cleaned before putting it on the market. This item definitely provides the most bang for the buck.
By following these general rules, it is possible to significantly reduce costs when turning over a rental property.Read more on Maintenance & Improvements