Should You Let Tenants Swap Apartments Within Your Rental Property?
At Nexus Property Management®, we are all about adding value for tenants and encouraging our clients to create win-win relationships when it comes to maintaining their properties and the people in them. That being said, when you’ve got a vacancy (most commonly on the first floor), and another tenant asks to swap so they can have that unit, the answer should be “NO”. This may be surprising, especially since we commonly push how important it is to cultivate strong relationships...so let’s break it down:
TWO FOR THE PRICE OF… TWO:
Let’s say you’ve got a tenant, Nexus Nick, who lives on the second floor and has been with you for over a year. You know he’s reliable and through him submitting maintenance work orders and you following through on them (like a good property owner should), you are confident that he is getting the value he is paying for in that second floor apartment. Basically...he’s been happy where he is.
So now the first floor apartment is available. You need to repair and renovate and with a professional in your corner you’ll use this opportunity to add value to your unit so you can collect a higher rent. You also want to do this quickly to avoid extending the time that goes by without any rent coming in. With the help of a quality property manager, you can get this done and place a tenant in about 30 days! On your own it’ll take longer, but let’s use that figure. Oh...and one more thing: turning an apartment over to become rent ready is expensive, no matter who helps you.
By saying “NO” to the requested swap, you’re keeping (historically happy) Nexus Nick where he is and where he has been content, but you are disappointing him.
Can we put a price tag on this disappointment? LET’S TRY:
IF YOU SAY NO, as recommended:
- You need to pay for first floor rent ready (~$4000)
- You lose a month’s worth of rental income during the process (~$1250)
- = $5250
IF YOU’D INSTEAD SAID YES (not recommended):
- You still need to pay for first floor rent ready (~$4000)
- You need to pay for second floor rent ready (~$4000) BECAUSE YOU NOW HAVE TWO VACANCIES TO TAKE CARE OF
- You still lose a month’s worth of rental income during the process (~$1250)
- You lose an additional month’s rental income while you get Nexus Nick’s now vacant unit ready to be rented (~$1250)
- = $10,500 !!!
PUTTING A PRICE ON HAPPINESS:
Do the math and we’re looking at spending about an extra $5250 to make an already happy tenant happy. You’ve doubled your expenses and for what? Yes, smart investors do take advantage of the rent ready process to add value to their properties, but at over $10,000 (full tally from “if you’d said yes”) it’s just not logical. Nexus Nick is a super incredible perfectly great guy, but is making him happier worth it? We say no.
Yes, this could create discomfort for you, but it’ll only be in the short term (and much less uncomfortable than shelling out an extra 5K). It’s not easy to tell someone “no” but share this math with them and the reason why is very clear. It’s even easier to share the disappointing news if you’ve made a habit of consistency by being fair and firm.
AVOID MUSICAL CHAIRS BY NEVER TURNING ON THE MUSIC:
The easiest thing is to just be consistent in not allowing people to move at all. You can even add it to your leases prior to tenants signing them if you want to make life easier (See NEXUS’ FREE LEASE CREATION TOOL BELOW). Once they’re in, they’re in for good. If you let one person move, it’s going to be that much harder to say no the next time someone asks. On top of the financial losses you’ll accrue, the short term solution for the client could too easily cause serious long term problems, especially if this becomes a trend.
[ Nexus’ Lease Generator: https://www.nexuspropertymanagement.com/lease-generator ]
At Nexus, we’ve been in the field developing best practices throughout Southern New England for over a decade. We pride ourselves on efficiency and being out in front of our competitors when it comes to innovation and rewriting the expectations of real estate investment. If interested in learning more about the other benefits that come with hiring Nexus Property Management®, contact our team at any of our franchise locations. We look forward to hearing from you.
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Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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