Inside T&H: Managing the Move-Out and Turnovers
Several blogs back we discussed our move-in process.
While you will see some similarities between our move-in and move-out processes, move-outs are obviously a whole different ball game.
Knowing that you’re losing a Tenant as opposed to gaining one puts some added tension on you as the property Owner, and we understand that.
The process of moving a Tenant out and getting the home in rent-ready condition again is relatively involved and our whole staff puts in a lot of time and effort to coordinate everything for you in the most efficient manner possible.
You want to minimize vacancy, and so do we.
If you’re not getting paid, we’re not either.
Let’s take a closer look at our move-out and turnover process so that you can have an overall better understanding of how we handle these big events for our Clients.
Tenant Gives Notice
While we make every effort to facilitate renewals, sometimes it’s just not in the cards.
Renters decide to purchase a home, their family size grows or shrinks, they get relocated for work, etc. There are many reasons why Tenants may choose to leave.
So, once your Tenant gives notice either in writing or via their Tenant Portal, the move-out process is set in motion.
You will receive an automatic notifier informing you of your Tenant’s plans to vacate and a whole slew of tasks will be triggered on the back end for our office staff.
The Tenant will also receive an automatic notifier confirming their intent to vacate and we will provide them with detailed move-out instructions to help make the process go as smooth as possible.
Per our lease, we require three main things of the Tenant at move-out:
- Generally leave the home in the same condition they found it, less normal wear & tear,
- Thoroughly clean the interior of the home and maintain the landscaping,
- Have all carpets professionally cleaned.
The Move-Out Walk-Through
Within the first two business days of receiving confirmation that the Tenant has given up possession of the home, the assigned Property Manager will schedule their move-out walk-through.
During their visit, the PM will generate a Move-Out Evaluation. They will document the current condition. This report will be compared against any prior property reports to determine any changes and who is responsible.
The Property Manager will not only focus on determining what is Tenant damage, but they also look for any deferred maintenance and take steps to safeguard your property during vacancy.
This includes setting thermostats at appropriate temperatures for the time of year and changing the locks.
The PM will contact you with a list of needed repairs to make the home ready for marketing and reoccupancy. A copy of their evaluation report, which includes pictures, will appear in your Owner Portal.
Please keep in mind, our lists are based on our years of experience and we always have the goal of getting the property in the best condition possible to attract the best tenant, at the highest rent rate, and generate the lowest days on market.
After reviewing the PM’s report, please let them know if you approve our suggestions or need to discuss alternative plans. We are always willing to discuss each project to meet your needs or budget.
Obviously, for any Tenant items, the work will be funded via the security deposit, up to their security deposit amount.
For any additional work that is considered Owner responsibility, we will obtain estimates for the work that you approve. We may request a financial contribution to your account prior to starting the work.
Note about estimates: In order to avoid delays and extend your vacancy, we generally provide one bid, per category, from one of our Preferred Vendors. While we totally understand the desire to compare multiple quotes and research multiple companies, this will slow the process down. Our vendor vetting process and years of experience has done that leg work already.
Now, that doesn’t mean you can’t find a cheaper price somewhere else.
What it does mean is that the reputation, ease of work, accountability and pricing is the best all around. Our Preferred Vendors offer a discount in their prices based on our volume.
In certain circumstances, particularly for very large jobs, we can provide additional bids. But, any minor cost savings that we may be able to find will almost certainly be overshadowed by the additional vacancy you’ll experience.
For basic turnovers, we strive to complete all work within 2 weeks. For more complex turnovers, we aim for completion within 30 days.
During this time, in order to kickstart the marketing of your home, we will place your property in “Coming Soon” mode on our website, which you can learn more about in our previous blog about our marketing process.
Once the PM notifies our Leasing Manager that all turnover work has been completed and the home is show-ready, we will fully market the property and send you an email notifying you that your property is on the market.
Typical Owner Turnover Items
Since each home is unique and every turnover is different, it is impossible to predict the cost of a turnover. Costs could be relatively low, or extremely high depending on the level of work that needs to be done to get the home rent ready.
One rule of thumb is to allocate 10% of the total value of the lease for turnover cost at the end of the lease. So the longer the Tenant stays, the higher the typical turnover cost will be because of more “normal” wear and tear.
If a Tenant stays for 3 years, at $1000 month, then you should anticipate at least $3,600 in needed turnover work to recondition the home for remarketing.
A few common Owner turnover costs include:
- Lock Change or Re-Keying
For liability reasons, it is mandatory that we replace or re-key all exterior locks on the property after a Tenant vacates. We will provide the new Tenant with two door keys and we will keep two copies of the key in our Office to perform maintenance work and/or walk-thrus.
- Professional Cleaning
Although we do require Tenants to clean the house thoroughly prior to vacating, it may still be necessary to have the house professionally cleaned prior to a new Tenant moving in.
Depending on the amount of turnover work completed in the house after the Tenant vacates and/or the amount of showing traffic through the house, it may be necessary to professionally clean the house once all the turnover work has been completed.
Remember, Tenants have chosen your house to live because they like it and they are excited about moving. We do not want to get off on the wrong foot with them by moving them into a dirty house.
- Maintenance Items
Obviously, if there are repairs needed, such as a leaky faucet, rotting exterior wood, caulking, etc., now is a good time to complete these items.
In almost every case, some painting will need to be completed between Tenants. We generally expect a paint job to last 4 years under normal conditions. We cannot charge a Tenant for minor dings and smudges on a wall, unless we consider it to be excessive or above normal wear & tear.
Touch-up painting is a challenge. EPA changes in paint formula has made it harder than it used to be. We generally try, if possible, but often entire walls and/or rooms may need to be re-painted. Extensive damage to walls, such as holes that are greater than 1/4″ will be charged against a Tenant’s security deposit.
Turnover Funding Program
T&H Realty Services offers a voluntary program that converts the last month of your Tenant’s rent into an escrow deposit to act as initial funds for any needed Turnover repairs.
We offer this option to all of our Owners when a Tenant gives notice. We use the held funds to make your unit ready for your next move-in.
Note: This option should only be chosen if you have just one property. If you have multiple properties, we can use the cash flow from other homes to pay for any needed work.
- Expedites the turnover process (less vacancy)
- Prevents transferring money back and forth
- Reduces the “out of pocket” funding
- All activity is tracked on your monthly statement
- When work is complete, any excess funds will be disbursed via normal Owner Draws
If you would like to participate in this program, please click here.