By Ben Holubecki, STML Realty Group, Glen Ellyn, IL
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.
Get started now. 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.
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.
Deal with your paint – This is an area where we see most owners overspend. Paint needs to be carefully examined and a strategy determined to minimize cost and address necessary issues. Very rarely does an entire home interior require painting top to bottom between tenants.
By making good decisions regarding paint we commonly turn $3,000-$5,000 whole house painting proposals 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 the painter’s schedule. The lesson is not to go crazy with the paint. Make choices that will make or save you money.
Carpet & flooring – If you are fortunate enough that your rentals have 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 if 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.
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 service calls once a tenant is in place. It is always easier and cheaper to complete repairs in a vacant unit rather than deal with those issues once the tenant is in the property.
Clean the place! – We are routinely asked by new rental property owners what is the most important factor that renters want to see when they come to view an available 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 as compared to the benefits of having a home 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 generate more applications from interested applicants. If you have very limited funds and can only choose one thing to do to a rental property cosmeticly, 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.