Syndication Expert Theo Hicks Walks Through Apartment Turnovers
If your business is apartment investing, you know good tenant relationships are critical to long-term success. Not only do you want to retain responsible renters, but you need a smooth process for turning over apartments when they move out. This step may sound simple, but its management affects your finances, tenant retention, and your reputation.
Syndication School instructor and Joe Fairless Best Ever Show podcast host Theo Hicks takes a turn in the guest chair to discuss apartment turnovers. He talks about inspecting a rental unit and organizing your information for efficient results. He shares his process and a free handy checklist that you can use in your inspections.
About Theo Hicks
Theo Hicks is a syndication expert who co-hosts the Joe Fairless Best Ever Show and the Apartment Syndication School education series. He also co-authors the Best Ever Weekly Newsletter and Blog, which presents strategies for passive investing, active investing, and managing commercial properties.
Joe and Theo recognized the need for quality guidance on getting started in apartment investing and syndication. Theo hosts free podcast courses that include worksheets and other documents for your business use. He also runs a private program for investors seeking mentorship on investing in commercial properties.
Trained in chemical engineering, Theo purchased his first multifamily property in 2015 and never looked back. His passion is the intersection of personal development and success. Here, he shares tips for smooth rental unit turnovers.
Turning Over an Apartment
If you’ve ever moved into a residence with some damage or broken fixtures, you know how frustrating it is. Sometimes, a management company or owner walkthough of a vacated property is too cursory and misses needed repairs. You want to do better for your apartments, and there are practical reasons why.
Protect Your Investment
First, you want to provide a high-quality residence for your tenants. Not only is it the right thing to do, but they will thank you by taking better care of the property. They will also stay longer, which lowers your costs and supports a stable neighborhood and property value.
Theo stresses that happy tenants help preserve your reputation. Active investing means your name is out there. People tend to write reviews when they have complaints rather than compliments. In today’s online world, your apartment complex could be reviewed on several websites and easily found in searches by prospective tenants. Business associates and vendors also check your reputation as part of due diligence. You want to model how to manage apartment investing well.
Dive into the Details
Each vacated apartment merits a detailed inspection. Theo advocates using a template checklist to standardize your process and ensure you don’t overlook anything. The list should have columns for noting any damage above normal wear and tear. You can deduct these items from the tenant’s security deposit.
If you find damage, you want to note whether it is a repair or replacement item. You will end up with an itemized list of what is ready for cleaning, what needs replacement, and what needs repair. This approach simplifies matters for your maintenance manager or vendors, such as the cleaning company.
Master Inspection Checklist
Theo cautions that you want to use a written checklist for each walkthrough. If you have done several of them, you may be tempted to rely on memory. However, it’s too easy to miss a small repair item that a new tenant will spot immediately.
If you focus on passive investing, you likely rely on a property manager or another owner to handle walkthroughs. Consider following up with them to ensure they are using a written process and documenting each turnover carefully.
Theo presents an overview of what to address for each section of your apartment. The below shows you the work scope you can expect, leaving full details to the checklist.
Outside and Mechanical
Theo recommends starting with the outside of your property and noting any issues. This is good practice regardless of whether a tenant has just moved out, as you can catch maintenance needs before they become serious. Also, check the unit’s patio, balcony, or yard for disrepair or landscaping needs.
Check the mechanical systems inside the unit, including HVAC and water heater. If the building has central HVAC, make sure heat and air are working in the apartment.
The interior laundry room is a frequent site of water leaks and clogged connections that pose a fire hazard. If your building shares a laundry room, you can take the opportunity to do a spot inspection.
- Washer and dryer operate normally.
- Hardware connections are intact.
- Hoses don’t have cracks or clogs.
- There are no signs of water leaks, such as stains or warped flooring.
Check fixtures such as lights that are common to all rooms. You want to ensure they work and don’t present a safety hazard.
Now is an excellent time to check walls and other surfaces, which can hide issues at first glance. Inspect walls, ceilings, baseboards, and flooring for cracks, nicks, stains, and holes. Look for mold or mildew that may need treating or indicate hidden water damage.
- Light fixtures, bulbs, and switches work, are in good cosmetic condition, and are secured.
- Electrical outlets work and are undamaged and securely fastened.
- HVAC vents open and close. Air ducts are clear.
Entryway and Livingroom
Check the entryway interior and exterior for missing or broken items. The door should close smoothly, lock securely, and be free of damage or warping.
- Windows open smoothly and stay in position. Glass is set securely in the frame. Locks work and are tightly installed.
- All windows have screens in good condition.
- Blinds and other window coverings operate smoothly and are in good condition.
- Smoke alarms are present and operating.
- If carbon monoxide detectors are installed, they work.
Kitchen and Bathrooms
These rooms are time-consuming to inspect because of heavily used fixtures and appliances. In addition to daily wear and tear, these areas also contend with moisture and heat.
You want to inspect and test each appliance even if it looks in good working order. Check the condition of each cabinet. Sometimes tenants don’t report minor maintenance issues.
- The oven and broiler work on all settings and heat to correct temperature.
- Range elements are intact and heat promptly and to correct temperature.
- Range hood has a filter and working light and fan.
- Refrigerator and freezer are operating at correct temperatures.
- Refrigerator and freezer lights work. Shelves and bins are intact.
- Ice maker and water dispenser operate without clogs. Replace the water filter.
- Garbage disposal works.
- Sinks and faucets function with no leaks or clogs.
- Dishwasher works on all settings and doesn’t leak.
- Microwave operates normally. Have it tested for leaks.
You want to physically inspect each fixture to ensure it is working correctly and securely anchored. In Theo’s experience, escutcheons tend to loosen. An escutcheon is the metal plate covering the hole where plumbing pipes exit the wall. It can look intact but fall from the wall when touched.
- Toilet is free of clogs and flushes without running.
- Shower turns on and has expected water temperature and pressure.
- Faucets have hot and cold water and operate without leaks.
- Sinks drain properly.
- The vanity has no damage.
- Cabinets doors and drawers work.
- Mirrors are intact.
- Tile is free of mold, mildew, and damage.
- Escutcheons are intact and well secured.
Bedrooms and areas such as dining rooms have few fixtures and are straightforward to inspect.
- Doors open properly, lock from the inside, and are free of damage.
- Closet doors work and are in good condition.
- Closet fixtures such as racks, rods, and shelving are intact and well-secured.
- Hardware functions properly.
- Mirrors are intact and anchored.
Take Final Inventory
Now that you’ve gathered your walkthrough information, it’s time to take inventory for your next steps. Do you need to make any repairs or replacements before renting this unit? The answer is likely yes, even with normal wear and tear.
At this point, you can quickly generate a list of replacements and repairs, by room or system, to give to your maintenance manager or vendor. After they address all items, the unit is ready for cleaning and a final walkthrough.
When you do the final walkthrough, try to see the apartment through a new tenant’s eyes. What’s your first impression? As Theo says, you should think, “Wow! I want to live here for a long time!”
If you standardize your turnover process, you’ll have happier tenants and better profits. Success lies in the detailed work behind an immaculate apartment.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.