Avoiding Significant Damages to Rental Units

[Brad Gibson]

I'm a pretty experienced landlord that has been at this for 6 years.  Just acquired my 29th and 30th doors, but of late I've been having trouble with BIG bills to turn units when tenants move out.  I usually charge 1x monthly rent for deposits and also offer sayrhino.com as a convenience for some of the units.

It seems in the last year, I've been running into turn costs of several thousand dollars.  $3,000 to $7,000 at times.  Those are really cash flow killers and the deposit or sayrhino.com policy don't come near to covering the repair bills.  I always do disposition of deposit letters which indicate the amount owed, but have never been paid for damages beyond the deposit.  I've taken prior tenants to court to collect the debt.  I've won the judgement every time, but have collected $0 on those judgements in 6 years of doing this business.  The court expenses and the time required to do the small claims court or pay someone to handle it just add to the misery of needing to repair the unit.

Does anyone have any tips for avoiding the large damage type turns when a tenant leaves? Here is what I have in the works or I'm considering.

1) Quarterly inspections of the units to note issues and bill the tenants while they are still leasing.  We will do these under the guise of replacing the air filters for them.

2) Not going to court for a judgement, but rather reporting the bad debt to a credit agency.  Not sure how I'm going to go about this since it seems a business needs to have a significant money relationship with the credit agencies to report.  I'd love to have suggestions on what might work well to get this done.

3) Raise the qualification standards for renters.  Right now we require 600+ credit score.  Clean criminal history and no evictions. 3x the monthly rent in income.  I use mysmartmove.com to run the reports.

Any folks dealt with the same issues and have ideas?  Part of it may be where my rentals are located.  We are in the oil patch of West Texas.  Many of the renters are (former) low wage workers who have come to the oil patch for the great wages that don't require special skills or degrees.  It means they're more transient and harder on the homes, even though they have the income and usually the credit to qualify.

Thanks in advance for the tips.  At this point, an option would be to repair and put the homes on the market for sale when they become vacant to take advantage of the strong housing market.  I'd rather not do that as the initial intent was to buy and hold long term.