Not many landlords calculate the revenue they lose due to the “tenant churn” over the years. The numbers wouldn’t exactly delight them either, as the National Average states that around three full months’ rent is lost with every turnover vacancy period.
That’s just under £3000 worth of lost revenue in the UK, $3,900 in the USA, and 579,000 AED in Dubai (as a minimum).
Regardless of the reason for an existing tenant’s departure, the turnover vacancy times are a headache for landlords to deal with. Resulting in no rental income, the added stress of looking for a new tenant, property refurbishments, and all bills becoming the landlord’s responsibility once again.
While many claims that turnover vacancy periods are simply “inevitable” during a landlord’s business cycle, we’ll discuss in this article how the pain of them can be eliminated completely.
Read on for the full insight.
The Fickle Nature of Tenants
A surprisingly few number of landlords consider the lifetime value of tenancy when renting their property out to a tenant. This is mostly because they’re fixated on the tenant’s character, monthly income (whether they can afford the rent on the property or not), and things like credit ratings.
If you’re a landlord, it feels like an achievement within itself to find a seemingly reliable tenant. However, it’s important to ask yourself the question “how long will this tenant actually stay with me?”.
As more people are struggling to buy their first homes, rental demand (across the board) has definitely increased. But even though this seems like good news to property landlords like you, the average monthly rent itself has also increased – meaning more and more tenants are dropping out of their tenancy agreements or needing to be evicted due to unpaid dues.
More turnover vacancy periods.
Even in the scenario when landlords secure a reliable tenant, the average tenancy period still remains at only 24 to 27 months (just over two years) across the UK, USA, and Dubai. This can be due to a number of uncontrollable reasons, such as growing families, new job opportunities, or tenants who simply want to “level up” to a better home. So, don’t be fooled into thinking that a well-paid and stable tenant is going to help you avoid turnover vacancy periods altogether – tenants are normally fickle by nature.
The Extortionate Costs of Turnover Vacancy Times
Naturally, the longer a property remains vacant, the more rental income you lose as a property landlord. But even though this alone sounds frightening, it is just the tip of the iceberg.
The entire process of tenant turnovers is a build-up of extortionate costs and a guaranteed way to rob you of your sleep and peace of mind. Not only do you need to deal with the sudden pause in rental income (as many tenants leave with short notice), but you’re pressured to fill up the property with a vetted tenant as soon as possible.
Let’s take a deeper look into exactly how the costs of turnover vacancy times can financially drain you:
1) Rental Income Loss
This is the most obvious and impactful loss for property landlords – which is a lot more nerve-wracking to look at when you calculate the loss of rent per day. Depending on the season and your property’s location, you could be looking at losing thousands during turnover vacancy times, while still keeping up with other bills, maintenance, and refurbishment costs.
2) Tenant Screening Costs
Every time you invite a new tenant to your property, it’s vital to carry out the right checks to ensure they’re legitimate and reliable. Credit checks are costly and time-consuming, and are usually followed up by employment and personal references – which again, eat up a lot of your valuable time.
3) Property Viewing Costs
Holding property viewings is not as easy as it sounds. There is the added expense of transportation costs every time you have to visit your property for the viewing, and the wasted time when potential tenants are “no-shows” or are simply unqualified.
4) Advertising Costs
Gone are the days of the “For Rent” sign being enough to advertise your property. With high competition in the industry, you can longer rely on word of mouth; therefore need to advertise your vacant property on good online listing websites. This naturally comes as an added expense, especially if you also look to recruit a professional copywriter, marketing agency, and leasing specialist.
5) Cleaning and Refurbishment Costs
Your property will need to be in pristine condition if you’re looking to attract the right tenants at a reasonable rate. This is regardless of how the property was left by your previous tenants – and bear in mind, cheap cowboy efforts often go noticed. During turnover times, you’re likely to rack up an enormous cost with professional deep cleaning services (including things like carpet cleaning, seeing to mouldy bathrooms, and more).
6) Legal Costs
This is unavoidable every time a landlord begins a new contract with a tenant. You will simply have to fork out the money of getting legal agreements prepared, hold deposits securely, and get all the paperwork in order.
No Turnover Vacancy Times Will Save You Thousands
It almost sounds too good to be true, doesn’t it? Property landlords are conditioned to believe that turnover vacancy times should more or less be expected at least every two years. However, at Luke Capital Group we provide a solution that ensures you will never have to experience the crippling pain of turnovers, for 8 glorious years.
When you rent your property to us through our Rent Guarantee service, not only are you promised fixed rent for up to 8 years, but we also guarantee no void periods. This means, no turnover vacancy times, and absolutely no need to worry about where your next reliable tenant is going to come from.
The result will be a substantially higher revenue over the course of those 8 years (with zero stress), as you will not become victim to void periods and the hassle of tenant turnovers. This works exceptionally well for us too, as we are looking to hold onto properties for as long as possible (as there is a benefit for us here, as well).
Another option for the smallest fee on the market is our Short-Term Rental Management solution, where our experienced team will rent your property to guests under the short-term rental model (or “Airbnb model”) and manage the entire process for you. This could see your rental income quadruple during peak seasons and easily avoid the pain you’re likely to experience with turnover vacancy times if you choose to rent out your property on your own.
Our services are designed to eliminate the pain that so many landlords like you are unnecessarily suffering from. Being a property landlord no longer has to cost you your sleep, sanity, and hard-earned money. Get in touch with one of our friendly team members today and say goodbye to the likes of turnover vacancy times and burning holes in your pocket.