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Cost of Changing Tenants

Every time a tenant move out, it will cost approximately 3 months rent to bring in new tenants. The cost includes vacancy, advertising cost in securing next tenant and cost to repair and clean the house in rent ready condition.

Therefore, for long term investment properties, it is best for the landlord's to sign a longer lease term to minimize the cost of changing tenants.

Posted by Caroline Tsou Chai on 04/09/2008 06:48 AM

Comments (3)

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3 Comments on Cost of Changing Tenants

APR

2008

Good post and something investors do not consider when they buy a property that they are going to hopefully make income on

Caroline

I recently advice an out of state landlord that he had a lease ending and wouldn't he want to keep the tenant who paid on time and never said boo!. He asked me to find out why they didn't want to renew, it was a storage issue they had accumulated to much stuff to stay where they were our solution was to have them sign a long term lease and give them the keys to a storage unit in the building at no cost. You point is well taken thanks for the post it is so true.

Your estimate is probably very realistic. I own a number of rental properties. Over the past 15+ years, I've gotten pretty good at replacing tenants, and it costs me on average 1 - 2 months.

Most of the time, I've been able to re-rent an apartment with no lapse in rent loss. Yet even in these cases, there are expenses (such as painting which is fairly equivelent to a months rent).

If I am lucky, the current tenant moves out a few days before the end of the month. I take advantage of these few days to paint the apartment and make any other necessary repairs. If the tenant moves on the last day of the month, I still paint the apartment and prorate the rent of the incoming tenant (partial rent loss).

It is definitely something that is not factored in by a new investor, good point.

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