Thursday, June 11, 2020 / by AJ Shepard
Chris: Hello, this is our Property Management Bootcamp second episode and today we are talking about the turnover process. We've got Ronnie again and Taylor this time, our turnover team, to discuss what they do when we have to turn over a unit. Now, most of the time, the turnover process begins either when we receive notice from a tenant or when we bring on a new client that has a unit that needs to be turned over. So what do you guys do when we get a notice from a tenant?
Taylor: Yeah, so after we receive notice from a tenant, we want to pass that communication on, not only to the team but also reach out to the owner and let them know your tenant is moving out on this date and they have given us 30 days notice as of this date and we will be working hard to get the property turned over and just increasing communications with the owner and also figuring out why the tenant is moving. Is there an opportunity to potentially keep the tenant or what is causing the move is also important to figure out. So when we receive notice, we want to pass that communications through the team and also reach out to the owner, and find out why the tenant themselves are moving or something that maybe we could fix or something along those lines.
Chris: I guess one thing to note is that turnovers are in general, I guess bad because we want our tenants to renew their leases. And turnovers are bad because they cost money. They cost our clients money. We have to send out our repair team and as well there's a vacancy. So that was one thing that I didn't even think about is contacting the tenant immediately. When we receive notice, contacting them immediately and asking why and see if there's anything that we can do to maybe change their mind, or maybe they're just upset about something that we could solve. That is probably the absolute first thing we want to do when we receive notice.
Chris: A lot of times, people get new jobs and they leave.
Taylor: True. Yeah, absolutely.
Roni: Our offsite professionals do send an email to the tenant and ask them to know the reason.
Taylor: Absolutely. So once we've received a notice and we know the tenant is not going to change their mind or they have an outside circumstance that they're going to move at the end of the day, we go forward, we pass the communications to each party. And we schedule with a tenant, at this point, a scope of work inspection. And a scope of work inspection is an opportunity for us to get into the property within a few weeks of their move-out and see if there's anything major that we are going to need to do to bring the property back to a rent-ready state. It also gives the tenant an opportunity to walk us through the place and give us an idea of the status of the apartment, house, condo, townhouse, whatever it was, with what they received when they moved in. What kind of condition did you truly receive it in? Maybe they have pictures and documents of that type of thing. It's an opportunity for both parties to just have more communication and more transparency around a move-out.
Roni: So at that time, it's also an opportunity. Oh, hey, if you replace all the burned-out light bulbs, you will not be charged for that. If the yard is returned in good condition, that's something that they can do before they move-out. That gives them a couple of weeks. As he said, he tries to schedule about two weeks before they move-out. So they have ample time in which to do some of the work themselves. It saves us time as well if our turnover team doesn't have to do that work.
Chris: All right. So we talked about the scope of work inspection and now...
Taylor: Yeah, at this point, the scope of work inspection has occurred. We've identified major issues so that we can make proper arrangements to handle them, maybe the tenant had a dispute one night and they punched a hole in the wall or something. But, we've recognized the issue and we know that we've been needing to replace drywall or do whatever these types of things are. So we've arranged for them to happen as soon as possible when the tenant doesn't vacate the property. And so now the move-out day has come and we've scheduled a move-out inspection, as soon or as close to the date that they've moved out as possible. So now we get into the property and we inspect it, we take hundreds of photos, we document things, we're just documenting the States that they received and then left the property in. And at this time we generate a scope of work and this is a document that tells us what we need to do to return the property back to the ready state for the market.
Roni: At this point, I review it, so that I have an idea of if I can send one of our handymen over to take care of it or if it's going to need a specialized vendor such as a drywall repairman. If it needs a full paint job, then I can send out one of our painters to do a bid. And then I also let the owner know, give him an idea of the repairs that we saw and recommend to them. Of course, they have the final say if it's a full paint job, they might elect to not do that, with livability issues, we need to take care of those right away. After the repairs are scheduled and done, then we get the apartment cleaned. I will be told on that turnover report if there's carpet or no carpet so that I know if I need to send a carpet cleaner out as well. Landscaping sometimes needs to be done if the tenant hasn't kept that up. And then for me, that's the final part.
Taylor: Yeah, absolutely. So now we have during the latter stages of this process, when we're kind of into cleaning, we want some market the property back to the market if you will, as soon as possible. And we'd like to do this between seven and 10 days, maybe 14 days to from the time that we start working on the property to make it rent ready to the time we know it's going to be absolutely ready for somebody to move into it. So we've started that marketing process in the middle of the turnover repairs and hopefully there's good interest in the property. We like to see at least one lead or inquiry per day on the property to let us know that our marketing is receiving good traction. So now after the cleaning is done, we are going to schedule a move-in inspection to document the state of the property. Once again we will also be showing the property after the movement inspection is complete. We will start setting up and doing the showings of the property if the property is in extremely good condition, there might be an opportunity to do some showings slightly earlier, but the idea is to minimize the time the property sits vacant and also bring the property back to an inhabitable state, a marketable state, so that everyone from tenant to owner is happy throughout the entire process.
Chris: In the city of Portland, there are some new rules regarding the move-in ready inspections. Do you want to tap on those?
Taylor: Yes. So I know I'm still becoming up to date with them myself, but there are new rules with particular units and you have to win as a tenant and you are applying for a property, you have to allow 72 hours before applications can be screened. So what this means for potential new tenants is, if you see a property come to market and you are to submit an application right away, you actually cannot be screened for three days. And if somebody waits three days and submits their application right on the mark, they actually have...
Chris: Yeah. You're touching on the new screening rules with the open application period or I guess the application waiting period.
Taylor: That's right.
Chris: And that is more in the leasing or marketing. So that will be our next video. We can really dive into the marketing, but we're talking about the turnover process. So touching on the new city of Portland rules for the move-in ready inspection. So this would be generating the move-in condition report.
Taylor: Yes. Yeah.
Chris: Go ahead.
Taylor: Okay. Yeah. The moving condition report is something new that was put into implementation on March 1st of 2020. And this is a report that gets issued back to the tenants within two weeks of their move-in that tells them of the state in which they've received the property in. This increases transparency all the way across and it makes the tenants more aware of the state in which they're going to be responsible to return the property back to the property manager, the owners in. So it's just increasing communication and it actually benefits the tenants because they get to see exactly what the property looks like in a moving condition report.
Roni: I wanted to add that in the move-out inspection, we grade those inspections as an a, c, or an F according to the degree of the work that we feel needs to be done. We convey that to the entire team so that everybody is on board and they know approximately how long it's going to take to actually do the turnover. And any turnover is something that's a pretty simple method. Just take a few days and then it'll be ready to rent. An F turnover might take us a couple of weeks, two to three weeks even longer to turn over and so the whole team is aware that that will not be that ready right away.
Chris: Yeah. I guess jumping back onto the moving condition report. The new rule with the moving condition report is that we need to be listing the age, all of the fixtures, whether something is new or whether it's been refurbished or whether it's beyond its useful life. And so, the idea is that if a tenant lives at a property for five years, then you would add five years onto all of the fixtures at the move-in condition report. And then you would apply them to the city of Portland depreciation schedule. And any damage or the replacement costs of new items would to, if something was damaged, then that would have to be depreciated. If something had a five-year useful life, let's say a refrigerator and it was damaged by a tenant, then you'd only be able to charge half of the replacement in that scenario where they lived there five years and there was a new refrigerator and it was a 10-year useful life. So five years had been depreciated out of that.
Chris: Fixture. So yeah. Why don't we just recap quickly, just the bullet points of what we do.
Taylor: Of course.
Chris: So Taylor, why don't you say which pieces you take care of or the team and then Roni let us know where you jump in.
Taylor: Okay. As far as receiving notice from a tenant, that might be typically that goes to an offsite professional and in an email.
Chris: To the customer service team?
Taylor: The customer service team. And from there communications get distributed by the customer service team, once again. Communications with the owner and tenant are also handled by the customer service team. The scope of work inspection is something that I schedule with the tenants two to three weeks from their move-out dates and at the scope of work inspection, it's something I do to schedule. I don't really... I just say are you going to be moving out on these exact dates? Okay, fantastic. Then I let them know I'm going to be doing the move-out inspection the day after that. And at the move-out inspection, I document the state of the property, take hundreds of photos and just generate at this time the scope of work and the scope of work is the document that lets us know and then I've distributed to the team but it's the document that lets us know what we need to do to bring the property back to a rentable state. At this time, this gets sent to Roni where it gets handed off and we start the turnover repairs process.
Chris: And then Roni.
Roni: Yes, I review the scope of work, look at the photos, make sure the owner is aware of recommendation, recommended repair work and then I figure out if our handyman can take care of it or if we need a specialist to go over and do bids and then we take care of those repairs. We get the cleaning people out there as quickly as we can after the repairs are done. And then I tell the team that it's ready to go.
Taylor: Fantastic. And during this time I am communicating with Ronnie to see if there are questions and clarifying things and also this gives me an opportunity to see when is the best time to market it because that is going to depend a little bit on the work that needs to be done for each property. So I start to compile marketing and I get that ready. I send that to owners and get their okay on the marketing. At the end of the cleaning, I schedule the move-in inspection and document the state in which the property will be given to the new tenant. And then the marketing fully goes live and we hustle to find a qualified new tenant.
Chris: Fantastic. And that is our turnover process.