Turn cost

What it means

Turn cost is the total cost of getting a unit from one tenant to the next: the work done between tenancies plus the rent lost while it is empty.

Both halves belong in the number. Landlords who track only the invoices see a few hundred dollars of paint and cleaning and conclude turnover is cheap. The vacancy is usually the larger half.

The work side — sometimes called the make-ready — typically covers:

• Interior repaint, in whole or in part
• Cleaning to move-in condition
• Carpet cleaning or replacement
• Rekeying locks
• Small repairs found at the move-out inspection
• Appliance servicing, filters, smoke-alarm batteries

The vacancy side is days empty multiplied by the daily rent, and it starts the moment possession ends — not when the work starts.

What does not belong in turn cost is a capital improvement you chose to make because the unit happened to be empty. A new kitchen at turnover is an upgrade with its own return; folding it into turn cost overstates the cost of turnover and understates the investment.

Why it matters

Turn cost is the number that makes every retention decision obvious, and most landlords have never calculated it.

On the canonical unit at $2,400 a month — $80.00 a day — a typical turnover looks like this:

Turnover, canonical unit	Amount
Interior repaint	850.00
Clean to move-in condition	320.00
Carpet clean	190.00
Rekey	140.00
Small repairs	380.00
Make-ready total	1,880.00
24 days vacant at 80.00	1,920.00
Total turn cost	3,800.00

That is 13% of a year's $28,800 rent, spent to replace a tenant with a stranger.

Set against it, the rent increase that so often triggers a turnover is small. Raising $2,400 to $2,520 gains $1,440 across a year. If the increase costs you the tenant, you have spent $3,800 to gain $1,440 — and inherited screening risk on top. That single comparison is the strongest argument for handling lease renewal deliberately rather than by default.

Turn cost also affects value. It reduces net operating income in the year it occurs, and at a 6.62% cap rate a recurring $3,800 every two years is roughly $1,900 a year of NOI — about $28,700 of capital value tied to how often your tenants leave.

How it works in practice

Turn cost is compressed by sequencing, not by spending less.

1. Inspect before the tenant leaves. A pre-move-out inspection two to three weeks out tells you what work is needed while the unit is still occupied, which is the only way to book trades in advance. In several states it is also a statutory step; see security deposit itemization.

2. Book everything for the same week. Most 24-day vacancies are about five days of work and nineteen days of waiting. Painter Monday, cleaner Wednesday, carpet Thursday, locksmith Friday — a sequence arranged in advance rather than discovered one call at a time.

3. Advertise before the unit is empty. Photographs from the occupied unit, viewings under proper right of entry notice, and a listing live three weeks before possession ends. This attacks the larger half of the cost.

4. Split the bill correctly. Wear items are yours; damage is chargeable. Repaint after a three-year tenancy on a four-year paint life is mostly yours. Applying the proportional method under normal wear and tear keeps the deduction defensible — in the example above, only about $405 of the $1,880 is chargeable to the tenant.

5. Categorise for tax. Make-ready work is generally a repair and therefore a deductible expense in the year paid, sitting in the $1,850 repairs line of the canonical year. Anything that betters the property or extends its life is capitalized and depreciated instead.

6. Reserve for it. A tenancy averaging two years means about $1,900 a year of turn cost, or $158 a month. Reserved monthly it is a budget line; unreserved it is an emergency.

Common mistakes

• Counting only the invoices. The vacancy is usually more than the work.
• Starting to market after the keys come back. Adds two to three weeks of empty days directly.
• Sequential trade booking. The single largest source of avoidable vacant days.
• Charging the whole turn to the deposit. Wear items are yours, and over-deducting risks treble-damages exposure far larger than the turn itself.
• Folding upgrades into turn cost. A new kitchen is an investment decision, not a cost of turnover.
• Ignoring seasonality. A December turnover in a cold market takes longer; a short renewal to move the expiry into spring is often worth the concession.
• Not tracking it. Without the number, retention decisions get made on instinct and usually wrongly.

How BareBones PM helps

Turn cost is the sum of two things that normally live in different places: invoices and empty days.

BareBones PM records turnover spending against the property that incurred it, categorised so make-ready repairs stay separate from capital improvements — which keeps both the turn cost honest and the tax treatment correct.

Because lease term dates and possession dates are stored on the lease, the vacant period is derivable rather than estimated, so the rent lost between tenancies can be added to the invoices instead of being forgotten.

Chargeable items from the move-out inspection post against the held deposit balance, apportioned against the asset record you keep for carpet and paint — so the landlord share and the tenant share are separated at the point the work is recorded.

The result is a real cost per turnover on each property, which is the figure worth having in front of you the next time you are deciding how hard to push a renewal.

For how repair and improvement spending is categorised, see Deductible expenses.