How fast should units turn upon a tenant leaving?

Question

For those that are working with a property manager on smaller projects - say under thirty units -

I had five tenants vacate without notice from my 16 unit building.  This was ok because we were just about to start the eviction process because none of them were paying, and they had a bad influence on the overall community.  Once they were out the plan was to fix up the units and increase the rent by about $100/mo to get them inline with the market.

The property manager has done a good job at saving money at ever step of the way, paint vs replace, negotiating payment plans with contractors to stretch out the cashflow etc.  But, it seems to have taken alot of time for the process to happen.  There is one company for paint, another for carpet, another for kitchen, etc.  It took about three months total to get the contractors lined up, work done, and per the PM, the units should be rented by the end of this month.

This is an established property management company in the area.  So my question is - am I being too patient or does flipping this many units at once take this much time?

Brian Adams · Answer

Account Closed, I do larger deals and we turn our units within 5 days.

So 4 months in total to get the units turned and rented is way to long.

Jake Thomas · Answer

3 months seems far to long. I can close and remodel an entire house and have it rented in under 3 months. Have them find a contractor that can get everything done in a couple weeks even if it costs a little more.

My question is that do you feel it's worth all the work you plan on doing if you can only increase the rent by $100? 3 months of work, paid contractors and you only get $1,200 more per year? Or have these units been due for a rehab for sometime?

Chris Soignier · Answer

I'd rather spend more money hiring GC's &/or contractors who will get in and out ASAP.     A cosmetic turn shouldn't take more than a week.    Think of all the lost potential rent vs. whatever you saved.    Stretching out payments to contractors is likely counter-productive, b/c then they'll want to stretch out the work.

Joe Splitrock · Answer

Account Closed that I would rather spend more money to get it done quickly. My situation is different because I am dealing with one house at a time, but in my opinion it should be easier to get people in quickly if you are dealing in larger volume. Have you told the PM that the process has been too slow and it is unacceptable? Give them a schedule, rather than asking them to provide a schedule. It is harder to get people to do things fast, so unless your PM feels pressure, they may just take the easier route.

Kevin Hunter · Answer

Account Closed.  I think you are being way to patient.  Spend a little more money on a contractor who will make you a priority, get in and out, so you can get the places re-rented.  I don't know the specifics of your particular place, but as I thought about your situation I made some assumptions. Let's say you are looking at an increase of 100 per month from say 750-850.  That means in three months you have lost 4250 in possible rents per month or 12750 total over the three months.  If you increased your bid price to the contractors by 2500 could you have gotten it done a month earlier??...That 2500 would actually net you a 1750 surplus.   For me, I always concentrate on as little a vacancy as possible.  I would say, again without knowing the specifics of size and scope of work, the rehabs should be complete and on the rental market again within one month.  That would have saved you 8500......

Account Closed · Answer

All -

Thank you for the fast responses.  I have a weekly call with my point of contact for the property, and I will be extending our normal time together to cover some ground that clearly needs to be covered.

Christopher Webb · Answer

A 3 month project is way too long. As the owner of a property management company, our goal is to have basic turns done in about a week. Ones that need rehab are about 2 weeks, sometime 3 depending on the project. A PM company should already have all the vendors in place for each of those tasks (carpet, paint, flooring, etc) and should be able to simply dispatch them out in the order needed.

While 5 units may be a large portion of your property, it shouldn't be an overwhelming amount for an established company. Again, they should be doing turns and possible rehabs for all their other turns on a regular basis.

I would be embarrassed if I had to tell an owner that their rehab/turns took more than a month to complete.

Rich Vogel · Answer

Hey Carter,

I agree with Chris.  I think you have to balance how much rent you are losing by the units being empty compared to what you are saving on those minor projects.  I have one general contractor do all the work and I even have a family member manage the job ( I pay them a small fee to make sure the project gets done fast and on time) they don't have to do anything except make sure the contractor is on schedule.  This is cause I am not around often between work,family, and finding other properties to buy.  I just had a tenant move out of a 1100 square foot 3bd 1 bath and we had the entire place painted, new carpets throughout, 5 new windows put in, 2 new doors, the porch painted, minor electric work, flat roof patched and the house cleaned and it took 9 days from the day the tenant moved out to when I could start showing it.

Ed Matson · Answer

Even with a new kitchen, it should be no more than 30 days max. We are having cosmetic turns (paint and carpet) being routinely done in a week.  Depending on scope, the kitchens should be 1-2 weeks.

How fast should units turn upon a tenant leaving?

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