Spring is already here, and summer is fast approaching. What does this mean for you and your multifamily? Well, in many cases, the summer months indicate more tenant turnover than any other time of the year! If you find yourself with a lot of pending departures at your apartment community, you may be wondering what you can do to get the unit occupied again most quickly, but also, what you will do in the time that it sits vacant. Because renovating units that are occupied is not fun for any property manager to coordinate, turnover is a great time to take advantage of unit turns. Below we have put together a few thoughts and facts that may help you reduce your costs during the spring and summer turnover seasons, and also take advantage of renovation services that will yield bigger rent bumps (and better ROI) through the end of the year and on.
Reasons to turn units upon tenant departure this spring:
- Preserve the reputation and integrity of your property
- Upgrades will attract more qualified and better residents
- Tax advantages and credits in renovating your property
- Amortizing costs with the intention to then sell the building
As an owner or operator of an apartment community, how can you keep turnover costs low?
There is no avoiding the fact that turnover rates, no matter where you are, stay around 50% across the nation for apartment communities. With this, property managers and owners are facing the same struggle in trying to reduce the costs of turnover. Ultimately, the only way to get around costs from turnovers is to avoid them altogether. Your efforts in keeping residents satisfied and happy in their apartment and your community should always be your highest priority. Whether this means high-tech shared amenities or new appliances in the units, this depends entirely on the demographic you serve. But, even if you have mastered tenant retention, there is no way to get around at least some resident turnover. As you probably know very well, every moment that your unit sits vacant means money flying out the door. Empty units are a property manager’s worst nightmare. Here are some tips in reducing the burden of tenant turnover, and instead, utilizing the opportunity to capture better ROI:
- Coordinate the timing of departures: If you have a large handful of departures all scheduled for the end of the month (which many are), and you have a small maintenance team of 4 or 5 employees, the time it will take to get all of these units back online will increase exponentially. In some cases, you won’t be touching some of these units until weeks after they are vacant. Rather than allow departures to stack up in one time period, control the departures by staggering move out dates across the month.
- Improve renovations and maintenance: As mentioned above, time is money. What incentives can you offer your vendors and maintenance crew to move “with the quickness?” Some property managers are using competitions and ranking systems to motivate turnover crews to work harder and faster.
- Stay ahead of the game: Rather than reacting to departures on a month by month basis, start anticipating the pattern for potential vacancies long before they take place. By creating a road-map for the year, you will be able to better anticipate some of the marketing it will take to get these units filled. By doing this, you can ACT before the month of vacancies arrives and in turn cut down the time it will take to get new residents in. Looking forward will allow you to constantly shift marketing efforts as needed!
Unit Turn Solutions that Will Mean Better ROI
If you find yourself with a lot of folks moving out this spring and summer, what renovations do you plan to take on for each unit? Do you have a plan? Outside of the obvious, which includes a thorough cleaning of the vacant apartment, are there other things you can do to make the apartment more appealing to future tenants? According data collected and from our personal experience, here are some tips in making the best choices for your in-unit renovations:
Light and Color: Owners and managers are able to differentiate from other buildings and make their apartments more unique by accentuating light and utilizing splashes of color. While adding color to an apartment by painting the walls can be a touchy subject, you can find safer places to implement color in the granite you choose for kitchen or bathroom countertops and in your hardwood floor choices. Different types of wood can often be a great alternative to adding more color and dimension to a space.
Granite: While 20 years ago it may not have been something an owner would include on a turnover checklist, it is today. Keep in mind, all communities have different demographics, but most do have one thing in common: they are looking for more luxury and at a good price. While B and C class properties may not have it in their best interest to check all luxury finishes off their list (hardwood floors, stainless steel appliances, all-wood cabinetry and granite counters), it does make sense to incorporate one or two elements that convey luxury. Kitchens and bathrooms seem to be at the top of resident’s lists when it comes to wanting luxury, so consider placing your granite there.
Wide open spaces: While space is hard to come by and many units in California fall behind when it comes to square footage, that doesn’t mean that residents won’t still look for the “feeling” of more space. Actually, it’s more important than ever to make a small space feel more open! Modern design calls for living, dining, and kitchens that are open and flow into one another effortlessly. A prospective resident will be attracted to a unit that feels open and airy upon entry, so keep sight lines from the front door in mind as well. If the dining and living rooms are already open to one another, this may mean a renovation as simple as adding a cut-out into the wall that separates the kitchen from the rest of the living space.
In addition to the items mentioned above, there is a long list of other renovations that could lead to rent bumps in your community. But, all of this really depends on where you are and what your tenants are looking for. For some managers, all they need in order to see ROI is replace carpet with hard flooring (vinyl or tile). For others, converting a closet or storage area into a stackable in-unit washer and dryer is the ticket. And, if you’re in DTLA or San Diego, you need to be extra sensitive to the technology focused amenities that the savvy millennial renter looks for today.
Call in the Pros to Better Prepare for Turnover and Upcoming Renovations
Last but not least, be sure to call in an expert to help make the most of your turnovers this year. If renovations or unit turn services are not performed by a professional, you may see an increase in turnover time (which is money sitting on the table), as well as potentially poor quality of work. If you work with anyone on the REIG Construction team, we will not only walk you through the renovations that will fit within your budget, but can also provide insight as to what can have the biggest impact on your bottom line. We understand that if you’re considering unit-turns, the renovations need to signal rent increases that will yield ROI and that TIME is of the essence.