Your rental income will reduce if your tenants are always laving. You will feel the decrease even if you always manage to get new tenants. High tenant turnover can cost you in other ways too. Below are some of the problems associated with high tenant turnover.
The most obvious cost is the missed rent as you look for a new tenant. Most property owners miss at least a month's rent when a tenant moves out. The duration can be longer depending on property supply and demand in your area. That can be thousands of dollars, depending on your rental charges.
You have to improve your property each time a tenant moves out. The necessary improvement depends on the condition the tenant has left the house in. At a minimum, you have to clean the house. You might also have to repair or upgrade some things.
Unless you have a tenant lined up, you have to market your house to get a new tenant. You have to list the property, show it to prospective tenants, or use an agent for the marketing. Your local rental market, target demographic, and property determine your marketing methods. The marketing methods determine the cost.
You have to screen the prospective tenants to weed out problematic ones. Tenant screening involves things like:
- Checking credit scores
- Running criminal backgrounds
- Verifying co-signers or references
- Verifying income sources
- Interviewing the tenants
Thorough screening helps you get the best tenants, but you have to pay for it.
Even with tenant screening, expect some level of uncertainty with new tenants. You might not get good tenants every time one leaves. You might get a tenant who is always late with the rent, noisy, and uncooperative.
Time is also a resource that you must account for while looking for a new tenant. Even if you opt for a DIY approach to save money, you still have to spend time looking for tenants. This can be problematic if you have a day job somewhere. You can outsource everything to a third party, but you have to pay for the service.
As you can see, constant tenant turnover can cost you many resources. Do your best to retain the tenants you already have. Maintain your property, offer incentives to your tenants, and be fair to the tenants. If you can't do all these on your own, engage a professional property manager to help you at a fee — the outsourcing will be profitable in the long run.