My experience with Memphis invest - $3900 repair tenant turnover

[Ruei-Jiun H.]

My experience with Memphis invest has been great until my first tenants broke the lease, and left with $3900 repair cost. What separate Memphis invest from other turnkey providers is their excellent customer service. They keep very good communication with their clients, this is particularly important for the out of state investors. 

My rental is 3bed/2bath ~1300 sqft; tenants stay for 1yr 5mo with pets. My questions are

[1] what is the normal/average cost between tenants turnover in Memphis

[2] with $3900 expense, which is equal 25% of the rent collected per month. This wipe out my profit for 1yr 5mo. I was educated to budget 10% on CapEx and 5% on maintenance. This is apparently beyond the budget. How does this real estate passive income model work for everyone?

[3] how to prevent it from happening? any suggestions?

I appreciate any suggestion. Thank you!

Here is repair cost breakdown:

exterior, $300

Interior, $1200

living room, kitchen, each bedroom and bathroom has their own specific repair, total $500,

replace carpet, $1100

pest control, $175

yard, HVAC inspection, cleaning, $660

[Jay Hinrichs]

have no bearing on who your turnkey provider is.. this can happen to anyone at any time... 

how to keep this from happening is to NEVER put carpet in your rentals.. put in the new lino's that are on the market.. carpet in rentals just gets trashed.

and double your reserve numbers.... most folks simply underestimate reserves.. having owned over 400 of these.

I use 50% of rent for costs.. out of the remaining 50% pay mortgage. and what you have left over is your NNN cash flow. if you do better over a 10 year run thats great.. but in the rental business its better to be conservative up front and there is nothing wrong with having a nice balance in your reserve accounts..