Your tenant moved out. Now comes the scary part with potential repairs and cleaning not to mention the possibility of a long vacancy. You’ve heard every scary story about rental homes being damaged and dirty. You know you’re on the hook for the mortgage payment even if there is no rental income.
Let’s start with the easy one; vacancy rates. Right now in our Portland Metro Area and especially here in Washington County, we are not seeing long vacancies. That being said, there’s always that one home that rents a little slower than any other. Even with that hurdle, we are seeing very short vacancy rates, sometimes only one day. Whew. It takes grand orchestration to manage that. You simply cannot have all the things fixed or cleaned at once. You have to pull in favors from your vendors so that the cleaning can take place before the carpets are cleaned….you get the idea. Long story short, with the market we are currently enjoying, there’s little vacancy.
I always recommend having minimally three months of reserves, preferably more. You don’t have to start there, you should try to grow to that level. This will ensure that when the tides turn and there are more rentals than tenants you will be able to manage your vacancy time gracefully. This will also help if there is a catastrophic repair that must be done. These events are quite rare at this time but remember the goal is to be ready for it when it comes.
The next item is what to expect during a “turn over” is some expense. Not all things can be charged to or paid for by the tenant. Normal wear and tear is the landlord/owner’s responsibility. This can include touch up painting, carpet cleaning, simple repairs, etc. Also you can expect that there are degrees of what can be charged to or paid for by the tenant depending on age and life expectancy. Be prepared that you will have some expenses during this time. It comes when you are vacant and not earning rental income so it’s especially hard to spend.
You can minimize your costs by excellent management. Periodic interior inspections can prove priceless as can pre-move out meetings with the tenant to let them know what is expected. Moving them into a pristine home will set the expectations. Proper advertisement can reduce vacancy rates as well. Again, excellent management, keeping tenants happy within the law so you have fewer turn overs and follow up are just a few of the things we do to ensure smooth transitions and low costs to you.