We spent the better half of last Sunday turning over one of our rentals. The tenant bought a house and moved out of the property three months early. So this week’s post goes over all the stuff involved with that.
First of all, a little law around this situation. Our tenant signed a year lease that expires May 31. They are obligated to pay rent on that lease, and we’re obligated to provide the tenant a place to stay until then. You can agree to end their lease early if you’d like, but you don’t have to. If we do end up doing that, we’ll get everything in writing.
This tenant is one of our better ones, so we’re willing to accommodate her a little and try to find a new tenant before May. It’s also in our best interest to do that. This tenant is paying rent after moving out so far. That doesn’t mean she’ll keep paying rent as scheduled. We also don’t love having vacant properties. We have to check our vacancies more frequently, and it’s harder to catch issues that come up.
Once we find a new tenant, we’ll refund the tenant’s security deposit minus any repairs or past due rent. We will be charging her for any cleaning or repairs we have to do beyond normal wear and tear. For example, this tenant left a bunch of personal property she said she won’t be taking. We’re getting a dumpster and charging her for that plus labor costs in throwing her property out.
What happens if she decides to stop paying rent? We’ll take her security deposit and attempt to file a case in small claims court for any balance owing. We also have rental income replacement coverage as part of our insurance. In some circumstances, we can use that to mitigate the costs.
How much of an issue this becomes depends on how quickly we can get the property rented out again. We have a carpet cleaner, duct and dryer vent cleaner, HVAC tech, photographer, and a dumpster coming out to the property this week. We’ll have the property listed for rent by Wednesday, and hopefully some showings and applicants this weekend. We could have a new tenant in by mid-March, or hopefully April 1 at the latest.
With the proper systems and processes, usually you can turn around property without much, if anything, out of pocket. But in the event we do need to spend our own money, we also budget for turnover and repairs by taking 10-15% of our gross rental income and keeping it in an account for just this sort of thing.
That’s the skinny on rental turnovers! Think you have what it takes to be a landlord? Let’s talk!