My first turnover, in the dead of winter!

As a buy and hold investor, we know that the worst possible time to turn a unit is in December. People are getting ready to travel to spend time with families for the holidays and no one is planning a move during that time. Well just one year into the real estate game, I received a text from one of my tenants that he was planning on leaving because he was starting a new job! He gave me a weeks’ notice, A WEEK! Mind you his lease end date was May of 2021! When I read the text, i panicked for a second but soon after I became calm, cool and collected and chose not to respond until I referred back to what I call the "Buy and Hold" Bible; “The Book on Managing rental properties” by Brandon turner. To be honest, I was a bit excited because I knew that once the unit was vacant, we could do some minor updates to it and raise the rent!

When I referenced the Bible, Brandon mentioned that when tenants break their lease early, he offers them this option whereby he tells them that he will not terminate the lease and they will still be responsible for what they legally signed up for, however if I, as the landlord finds somebody else to move in to the unit, the previous tenant will receive a pro-rated credit for the rest of the time that the unit was no longer vacant. For example, if I found someone to move in by January 15th then the previous tenant would get a pro-rated refund for the other 16 days.

When I responded to the tenant, I gave him two choices. To fulfill the term of the lease he would have to pay the remaining balance of $4000 but I informed him that I would meet him halfway, if he paid half of that. So the first choice was to pay $2000 and also get the unit professionally cleaned and we would part ways. The second option that I learned from the bible which was for him to keep paying the rent and when I find somebody to occupy the unit he would be off the hook for the lease and receive a pro-rated refund. To my surprise he chose option #1, which I did not understand the reason but I figured the tenant probably thought that I would let the unit sit vacant and just receive the rent that he was paying until the lease was up. as we know letting a unit sit vacant just cause, is a big NO in our industry. 

Once the unit was vacant, my wife and I went to the unit and did some painting, pressure cleaning and added a few new appliances. We received a lot of potential interested renters and ultimately we pick the individuals that met our criteria and the unit was re-rented by February 1st! So there you have it, I survived my first turnover in the dead of winter! A couple of tips I would offer to anyone who experiences a surprise “hey I am planning on vacating in a week” text or email.

First, don’t panic and don’t respond too quickly without thinking clearly about your potential options that makes the situation a win-win. Remember this is a Service based industry, so still treat the tenant with respect and come to an agreement that both sides agree on.

Second, as soon as you come to an agreement with the tenant, start marketing that your unit will be available on a particular date, so you can to start lining up interested customers. By doing this, once the unit is ready, you will already have potential interested individuals to come take a look at it.

Third, do not over improve the unit based on the neighborhood class and the rent averages in the area. Replace what needs to be replaced, do the proper touch-ups and keep the unit in par with the area. For us this was in C class, so we did not overly improve the unit.

Happy Investing!