Turnover rate with renovations in mind?

[Jon Schwartz]

Hi all,

I'm planning to purchase a small apartment building (10-20 units) and execute renovations as units turnover.

When's the typical tenure of a tenant? I've read that a unit typically turns over every two years. Is that a good estimate?

In my underwriting, it is prudent to assume that all units will turnover and be available to renovate within two years? (If I know that a tenant has been in place for 2+ years, I can underwrite that unit not to turnover anytime soon.)

Thanks!

Jon

[Marcia Maynard]

Length of tenancy depends on the property, the type of tenant, and your management style. Our longest term tenant has lived in the same apartment for 30 years and another for 26 years. Three other tenants are passed the 15 year mark. Most of our tenants stay at least 5 -10 years, but some only 2 or 3. Shortest tenancy was 2 months when "best girlfriends" learned they couldn't stand living with each other. 

Regardless of how long a tenant stays, it still may be possible to renovate while the tenant is in place. We've done upgrades, changed flooring, painted, switched out appliances, changed plumbing fixtures, changed lighting fixtures, and all sorts of things, without requiring the tenants to move.