Topic: Turnover costs

I have a few questions that I was hoping to get some feedback on....

1. What would you say is the expected % of turnover per year in a regular market rate property? Is there somewhere to find the industry average on this?

2. What is the average cost per unit that you spend to get a unit rent ready? How old is your property?

3. When you plan your budget for the new year how do you estimate how many units you expect to move out in the upcoming year?

4. Do you offer renewal incentives and if you do what are they?

Hi Candace,

Our expected t/o in my community is 30-40%. I suppose this is average in my market. Aside from using my own records, I get this information from our local housing association. The management company I work for subscribes to their reporting data. I'm not aware of any organizations that can afford to give out the information for free but I bet there are some!

We spend usually $500-$3000 for turnover on each unit. It just depends on how long the resident lived their and how much damage we have to repair. Our property is 40 years old.

When revising our budget, we take the current year actual to project for the next year.

Our current renewal incentive is cleaning the residents carpet if they sign a one year lease.

I hope you find all the data you are looking for.

:)

Rose

I've been working on my numbers for turnover costs and this has to been the most difficult part of budgeting.

I, too, use last year's turnover number, unless there was unusual circumstances with the property, and add 2 or subtract 2, depending on what I expect to happen.

Then, I pull a list of lease expirations broken down by the month and try to divide that number based on the highest number of expirations in a given month. I look at that list closely to see who I think may leave, too.

We offer a menu of incentives to those residents who renew 60 days out, not the required 30 days.
Some of those incentives are: Carpet cleaning, new light fixtures in bathrooms, painted accent wall, new 2" blinds in the living room, and more.

It's surprising how many residents don't take advantage of the "Early Bird Renewal Bonus" and still renew their lease for a year.

I've already had one unexpected move-out and another lease breakage coming up in February. There goes my 2 extra!!!

I spend $800 for just the minimum, basic turn with a full paint and carpet cleaning. Carpet stains, painting cabinets, large replacements and carpet replacements are a lot more and can add up to $1800.

My property is a previously neglected 30 years old.

Hi Candee,
The industry average for resident turnover in the U.S. hovers around 60%, shocking as that may sound. I have heard in Canada it is more like 30% or 35%, I don't recall exactly. I'm curious why you are asking, however, because I have a theory that our industry continues to think such a high resident turnover is "ok" because that is the industry average - as if it excuses it somehow. Does that make sense?

Brent..... That is a shocking number and much higher than I expected to hear. I am asking because we have been reviewing our turnover numbers on our various properties and we thought our turnover numbers were a little high although no where near the 60% you are talking about. We are working on trying to lower our turnover numbers.

I was also curious to see how much other properties spend on getting a unit ready for a new tenant and while I know that number can vary greatly depending on the condition it was left in I was just hoping to get some rough numbers. :)

The first question is (in my humble opinion) not good when comparing to industry. I look at what the others in my area have, what they are offering, and how old they are. So, mine is more based upon the city/state you are in. I am sure depending on the city/state you will see a range from 15 - 50%. Mine is when I see it above 35% to start looking at what the reasons are. Out going surveys by and independent source is good to have as well. Can give you some insight, not saying they all with be truthful and upfront, but I look for common themes.

Turnovers can cost you from $1000 - $4000 depending on how long the tenants were there, what checks you were doing in units while they were there, age of property and appliances, what kind of purchasing power you have.

When planning budget for move outs I look at historical data and averages and I look at the 5 year trend. Then I look at all leases ending by month and I make an assumption that they are all moving and that is just me, because I know I will not come up short. I am of the mind rather over estimate what I need rather than under estimate.

Retention incentives, I put them as having an exceed expectation maintenance team, that is very proactive in fixing maintenance problems. If, It cannot be as an example appliance fixed in 24 hours, then replace it with another appliance and fix the appliance in shop. If it is a part and it cannot be obtained in less than 24 hours, replace and fix in shop. It is aggressive and there are those who will argue it costs too much money and in the long run this arguement has never been true from my end. Then besides maintenance having great customer service from the manager on down. Being attentive to the tenants and spoiling them and getting rid of those that take away from community being safe and a good place to live. So, gangs, drugs, prostitution, and unsupervised minors are no, no's. So, my incentive is the service you give and actually it is a no brainer with the customer because they want to stay. They know when you care and take care of them.