It has been awhile since I had an official update on my 4-plex. The past few months have been hectic for me with the showings, fixing, cleaning, painting, and etc 1000+ things that comes with having a rental property. Turnover sucks so bad. That’s why a lot of landlords would keep the rent low so they don’t have to deal with turnover.
However, as much as I don’t like turnover, I manage to find some great reason to have tenant turnovers:
1. $10,000 raise of course. When I’d be lucky to have a $2000 raise per year. Since, I am my own boss, I can just give myself a raise just like that, when I do great work with my property! With the raise rent, I am able to cover the mortgage with 1.5 unit rented instead of 2.5 units. Improve cash flow, so I am not under as much pressure to get the apartment rented to make mortgage.
2. Improve property value. If I continue to let the property goes as the previous owner, the property will remain as a fixer upper – attract the wrong kind of tenants. But after I fix it up, raise the rent, people who don’t want to lose a huge deposit, and they will be more gentle with the place. Now, the 4-plex is a lot nicer. It’s quite pleasant to be in it.
3. Opportunity to find the right tenant. If I don’t move these people that haven’t been taking care of the place, they’d feel like they live in a slump, so what worst can’t they do? So the cycle keep on going.
4. Exercise more often. Well, before tenant turnover, I’d go to work, then home. Then a 3 times a week, I’d play something – tennis, soccer, badminton, etc. Now, if I show the property 4 times a week, I exercise 4 times. Show up to play tennis at the super nice courts a few blocks away, then show the property, or vise versa.
5. Opportunity to networking. One of my renter was actually setting me up for soccer discount for my whole entire team. We got to go down the field and play a couple games. That was an awesome experience. I now have a wide number of handyman I could call for my personal home or the 4-plex.
**At the end of the day, there will always be something good out of the negatives. You’ll just have to look for the “blessings in disguise.”
Proofs: Take a look at some of the before pictures after a group of tenants who doesn’t take care of the place moved out:
Hi Vivianne
How much do you have to spend for maintenance with all the cracks and cleaning there?
Do you also hv a minimum contract set up there for each tenant? Agree with you that turnover means having to find over the new tenants and this may even take months to conclude.
B,
The pictures didn’t tell all, they left several mountains of broken furnitures and stuff in the backyard. I have to hire people to get ride of it. For this case I kept all of the deposit. The damages was far over the $850 they had paid in deposit 2 years ago for a 3 bedrooms apartment. They literally treat this place as a trash holding place. The hallway was full of their furnitures, and I couldn’t even show their apartment while I was looking for tenants.
What I did was: showing the nicer apartment in the building 2-3 months ago while that one was turning over, so potential tenants won’t get turn off by their messiness. In return, I gave the ex-tenant in the nicer apartment most of their deposit back for keeping the apartment nice, clean, and being cooperative with me in the turning over process. I also gave them steeler tenant feedback when she ask for references. I was sensitive enough to schedule showing to only once a week on Sunday, after I got back from temple.
Ouch that’s a lot of damages for careless tenants. Maybe you could raise the damage deposit for the next round of tenants?
Great suggestion regarding raising deposit. In my State, I’m allowed to charge upto 2 times the rent for deposit. However, my target renters are students and young professionals, it is difficult for them to come up with the cash upfront. So, landlord around here are usually ask for the deposit equivalent to the first month rent. Then, each year, there would be a small increase in rent, the deposit remain the same, that’s why the damages exceeded the deposit.
Out of the 4 turnovers (a couple of them was roommate turning over, not the whole unit), this unit is the worst. But it’s generally not as bad. Thanks to No None Sense Landlord’s form, I would give them guidance on what they need to do before moving out, most of them are pretty good at clean up.
Yikes. I have had bad renters in the past as well. The good news is that you can keep their deposit and make the fixes. Then you can raise rents to the new standard price in your neighborhood. Hopefully you find good renters this time.
So far so good, I go through the rigorous process of choosing the right tenants. I keep my rent below the market price just so I have that option.
Do share about your bad rental experience and how you deal with them so we can all learn.