A lot of comments lately have been how people are basically losing their entrepreneurial spirit...they are beaten and worn down by long-term tenants and/or the lack of responsible, reasonable prospects.

Time to brain storm for a few solutions?

One idea about long-term tenants came to me today: Term Limits! Most of us want them in Congress...how about in our own Houses?

I was thinking what if we put an absolute limit on how long someone can stay in our homes, regardless of how great they are? We all know tenants have expiration dates, it just happens - so why not set a "Best Buy" date rather than an "Expires On" date?

For instance, we have an almost 15-year tenant moving out. No real damage, but the house is simply worn out. AND times and tastes change - so it needs new flooring, new paint, new countertops, cabinets updated somehow, even hardware and hinges need to be changed if I want to re-set the market-rate bar. So a lot more work even if the tenant was a good one!

BUT I've found that if a tenant moves on after three-four years max, we can flip that space in 24-hours (assuming we've done our homework and chosen the right tenant to begin with of course.)

And rents: we tend to raise our rents to market level at turnover without a qualm, but a long-term tenant 1) may not be able to afford the new market rent - they qualified for whatever it was years ago, but that doesn't mean they can afford the newest levels and 2) the house is tired enough that maybe the house is not WORTH market-rate without renovation.

So I'm musing that maybe a term limit is going to be built into my plans for the future. I'm thinking four years MAX before a non-renewal?

CHEERS to MYOB for being the Original Poster

of the 3- year tenant turnover and his reasoning why

WMH,

You have made an excellent post here! However, since many LL's seem to have a fear of vacancies (I welcome them for the reasons you gave) and do not raise their rents because of that fear, I am not sure if your proposal here would work in practice. Plus, the only way I know to get a long term tenant to move out is to raise the rent beyond what they can afford and then an eviction usually follows. The few long time tenants I have had generally do not move out voluntarily.

Last Monday I filed an eviction on a 6 year tenant who could no longer afford my rent increases. Once she is out, I will rehab the house and either re-rent the house at Market rent or sell the house as you mentioned.

I get it... some folks get worn out. But... why?

Are they making record profits?

Are their units increasing in value year over year?

Are they improving their processes leading to less wasted time and more freedom?

I don't think the problem is simply time; rather, it's how things are going! I'm about as excited as ever to see my mortgages taken out so long ago disappearing as they are paid off or getting much smaller. I'm glad to see my rents increasing and profits growing.

I too have mentioned that I like to flip tenants about every 2-4 years. That seems the ideal time to move along so that folks don't get entitled. Do I have a few long-timers? Yep, but they are the ones who pay in full, on time, every time, who keep the places nice, and who don't pester me. Those are GOOD tenants, and I'm happy to keep them.

AVERAGE tenants need to move every 2-4 years.

POOR tenants, the few that slip through screening, need to go ASAP.

You're probably aware of the corporate philosophy to fire the bottom 15% or so of your employees each year and keep improving. Sort of like thinning the herd which can only move as quickly as it's slowest member. I'm selling my most run down house this afternoon... closing is in about 30 minutes. It was so old the galvanized cast iron pipes were starting to corrode and need to be replaced. I bought it 6 years ago for $16,000. Spruced it up a little (all in $19K). I'm selling it today for $55,000 on owner finance on a one-year balloon note to another investor, and I'll make about another $5,500 interest (10% rate). I own it today free and clear.

So let's see... that "worn down, tired" house is netting me a sizeable profit, plus all the rents I collected over the years. Yes, it was time for it to go, but only because it was going to be an AWESOME deal for me. And that's pretty exciting. The proceeds should pay off 2 other small notes I still have, causing my cash flow to increase by about $1900 per month.

Nope, I'm not tired at all. I'm WIRED!

MYOB did promote the "Best By" expiration date idea, and his reasons for it were sound. Not being someone who worries about turnover, I agreed with him but didn't have a formal policy about it.

Given the nature of our local beast, our turnover rate is usually 4-5 years max anyway: people grow up or out of "living at the beach" and move on. Or buy a house themselves.

I was thinking of MYOB as well.

I understand the reasoning but wonder about the cost of a vacancy for the average LL. However, I do realize that you are the turnover queen so that would not be an issue for you.

It would allow for minimal upgrades as time goes on, instead of full rehabs.

I can understand that many folks are feeling a bit of fatigue.

I try and take the path of least resistance - thus the easiest path to blaze. Getting rid of your good clients is a great way to make sure you work harder in the future.

Those folks have lost there DREAM.

They were excited in the beginning, gonna get rich, gonna build an empire... but tenants and toilets quickly wear us down. Go back to your mindset when you first started. (That's wh I love talking to newbies!)

Gotta have a DREAM bigger than your problems.

Gotta FEED that DREAM everyday by reminding yourself WHY and focusing on the prize when you reach your goal. Pictures on the bathroom mirror come true.

I was out in the heat today, sweating while taking pictures of a trashed eviction house. I could have moaned about lousy tenants but instead focused on how cute this house looks when cleaned up, how we will be charging the res full full price to clean it, and how I have someone wanting more cleaning work just a text message away.

A little TOP DOWN SPEED THERAPY helps restore my attitude!

And yes, I yell FREEDOM!!! with the wind in my hair!

I'm with Tim. Long term is more profitable. Years ago the average turnover cost used to be $3100. Certainly higher now.

We don't wait for turnover to raise the rent. We do it every year on each lease.

Plus it is definitely harder to find good renters now so we hang on to the ones we have.

Stuff needs to be ungraded whether they stay or turnover, but the expense is delayed as long as they stay.

It take just as long to paint a room now as it does 10 years from now, but we did not have to paint it 3 times in those 10 years.

PS

I like our residents. They are not a "pain" and need to be culled.

They do the minor maintenance on the homes, pay off our mortgages, and give me cash to play and buy stuff for Wifey.

BRAD

I don't have any unreasonable expectations from REI. All that glitters is not gold and you have to hone your craft especially when the gov't is trying to make it as difficult as possible.

"Good Cause" "Just Cause" eviction is spreading like wildfire upstate now that it has been greenlighted in NYS's 2024 budget for downstate with an opt in for upstate. Only exemptions are new construction AND those with fewer than 10 doors (which will be revised downward in subsequent legislation)

NYS activists are aggressively lobbying for more legislators who are renters themselves as opposed to home owners and much less small landlords.

Albany has already adopted GCE and Ithaca, Rochester and Syracuse will soon be on the band wagon as well as smaller cities such as Geneva, etc.

Brad, I thought all your houses are rented as rent to own? how are you able to charge for cleanup?

My current rehab had tenants in it for five years. I moved them from an apartment to a SFH.

Have owned the place almost 20 years. In that time I have put new carpet in once, sheet vinyl in kitchen and laundry and had to repair the bathroom floor one time as well.

I have painted the place maybe three or four times. Was always the same color until this year.

Now I am doing a more extensive rehab on it. It is taking me longer than I like, but it is a a 1972 building and had the original trim, kitchen and tub.

Pulled the countertop, tiled the backsplash, new vinyl and carpet throughout, new tub, tile surround and up the walls in the bath. New paint that is more of a greige and nothing like the antique white from before.

I still know that even though I am bringing the place up to more modern looks I would have left it as is if the tenants had not moved. Now I should be able to keep it as is with only minor touch ups for another 20 years.

With all the talking about how expensive materials and labor are as well as some saying finding good tenants is tough I will let my people stay as long as they want.

I don't believe 75% of anything I hear here.

Oregon has new law that you can not evict for no cause after 1 year. I LOVE long term GOOD tenants. Turn-over creates work and expense....both of which I am trying to minimize.

I hear this "can't evict for no cause" but that's always been the case everywhere, hasn't it?? A tenant with a lease has to break that lease somehow to get kicked out, otherwise what good is a lease?