Move Out Charges

The Property Management company that I am employed through is looking to re-evaluate and improve their current move out charges and procedures. I was curious at to what your charges/ procedures are! What are some helpful ideas that I could give to them?

Good luck revising your move out charges. Check your state laws and rental agreement carefully to see what you can or can't charge for. We can't charge cleaning fees in my state.

Here's my recommendation about move out charges:

1. Treat everyone exactly the same.

2. Consider the "big picture" when you think about what you want to gain from increasing your move out charges.

If you want to boost your overall income, increasing your move out charges may not be the best way to do it.

I'm very generous when it comes to charging residents at move out because these are the people who are most likely to spread the word about the service they received at my property. Nearly everyone that doesn't trash the unit here gets at least some of there deposit back. I Always thoroughly explain to them what to expect from the moment they give notice. I contact them after move out to make sure they received their refund. I ask them to consider posting a review on aptratings.

Even the residents who didn't like living here will have something positive to say about us if we make the effort to show we care. "Hit 'em where it counts" (the wallet,) can work two different ways.

Charging less at move out earns you a reputation that attracts savvy consumers who rely on internet ratings and reviews. My numbers prove this theory works. So far this year, I've made $14K more than budgeted. Last year finished at 22k more income than expected.

My occupancy is 100% and my average turnover vacancy loss is [i five days[/i]. (If I could turn an apartment quicker it would be less.) My approval rating is 93%

Food for thought...

I can't agree more and stress the importance enough of communicating the move out expectations when the notice is received. When done in the effort of ensuring they get as much of their deposit back, the WOM about your customer service takes off. Now, your company may question this because they want the income. Don't worry. You'll still get the income. By laying out the expectations, you've completely covered your basis. They can't (and won't) come back to challenge your charges because your final letter to them will reference the conversation that took place when notice was given. So, here's how it works. You'll need your move out procedures and fees prepared on a document. Then you sit down with them, go over the expectations with them and ask them to sign that they've received the information. That's it! They perceive it as great customer service and it is, and you can feel confident about charges that need to be applied at move out. We've even titled ours Helpful Tips for a Smooth Move Out Process. Will people go the extra mile to clean? Some do. But, honestly most don't. We saw more effort put into the cleaning of the apartment, but for trash out services(for example) they thought the fees were worth the service! So, now the perception is that we offer the services for them at this price! I stress having a conversation at the notice. Don't get lazy and start putting them on doors and such. Obviously, sometimes that's the best you can do, but make the effort to reach them via phone or email at least. One last suggestion- we went so far as to introduce these procedures at lease signing. BINGO! Out of the gate they are thankful for the tips on how to keep their apartment up while living there and you get a signature!

Win win. I absolutely love this process. I hope it may work for you as well.
Good luck!

Stephanie, Can you share your "Helpful tips for a smooth move out" form? I have a cleaning guidelines form that has a small paragraph of tips but I'm always looking to improve it! My "Move out cleaning guidelines" form is in the file bank if anyone wants to check it out. I've noticed a huge difference in how apartments are left when residents are given a checklist of what to clean.

Sorry for the delay, I've been away. I absolutely will share. Standby.

In my case, my deposits have been historically low; 6 months ago we started collecting a $250 deposit, prior to that; most residents had a $99 deposit (if any at all).

I do have a set of flat rate charges that I show residents giving notice of what to expect. Since I have no records as to when carpets/paint/lino were new (prior to my arrival) unless I replaced the carpet myself. If I have to replace the carpet for a resident who is leaving, I am not charging for it on the basis that I do not know it was new at the time of move in. The new carpet and lino I am using is backed with a 15 year warranty and is made from recycled material, so if I replaced it once and it needs replacement, it is done free of charge and I do not have a charge to pass to the resident.

What I will say is that when I passed 6 months on property, the management company that hired me was fired by the owner and the new company chose to keep me. Under the old company; we had no collection agency on retainer, so I had to basically write off any reveue due to residents leaving with money owed. Under the new company, I have a collection agency and sent to them and/or the attorney (as appropriate) 21 files representing nearly $25000. I am hoping to get another crack at some lost revenue.

Johnny,

What kind of carpet are you using? Our company currently uses a five year life span for carpets. Of course we pro-rate depending on the time a resident was in the unit. Our building is 6 years old and recently many of my original residents have had to move on to assisted living. Based on the 5 year life expectancy of the carpet we use now I can not charge back anything. At $963 a pop that has put a HUGE dent in my budget.

We too use a collections agency to recover damages. Fortunately I rarely need it, but I have to share this story:
On 8/1 I had a resident move out after 1 year. The carpet was brand new but totally distroyed due to blood stains (a whole other story). Anyway he knew he would have to play for the carpet replacement. After move out I sent his statement and was promised a check. I decided not to send the account to collections because I was confident I could collect it without them taking their cut. Well the 10th rolled around, then the 15th, when the 20th got here I was really starting to sweat. By the 24th I was freaking as the 25th is close out and all accounts to be written off were to be sent to my RPM. I was so afraid I was going to have to explain why I broke policy on several levels. FINALLY at 3 the afternoon of the 24th the check arrived. I was seen doing a happy dance in my office. I have to admit though, that I would probably do it again

Oh BTW This ^ was my post. I didn't realize I wasn't logged in.....wondered why it asked for my name Working 12 days straight as addled my brain!!

Stephanie,

How does your trash out service work? What are the restrictions/pricing that you charge?

Thanks!

Hi Nicholas,

So, the trash fees we charge are $20.00 per bag. It's not actually a service, rather it's percieved as a service.

Rose, I have added the Mout charges to the file bank. The Helpful Hints is just a cover/into page to the charges. It's property-specific so I didn't add it to the bank. But, it outlines our procedures and the expectations. I apologize for the delay. :blush:

Feel free to call me to discuss in more detail if you'd like. 469-628-0502.

@Stephani: I have the product information about the carpet/lino I am using for ALL my turns. If anybody would like a copy; email me directly at: [email protected].

I did mis-speak when I mentioned the warranty was 15 years; it is only 10.... oops....

Hi Johnny, Does the warranty cover stains and wear and tear or is it for defects in the carpet?

We out source cleaning & repairs when there are larger charges involved. There is too much subjectivity involved in determining what things "should" cost. When you go to court you have an invoice(s) to prove the communities out of pocket costs.

Trying to explain your employees time, the amount of degreaser they used etc, is not worth the trouble. Rely on contracted costs and you are safe from the backup standpoint. Documenting thoroughly, the age of equipment and cost / value of the equipment, will help in determining the total due for damaged equipment.

Small security deposits are common in the affordable industry, and commonly dictated by the market in which your community resides. You are often left with going after a former resident for the balance. In the event you have to go after the person legally, great documentation is key to winning the fight. My recommendation is to contract out the work where realistic and pass the costs on. While it is frustrating your deposits do not cover some of the damages it does not mean your NOI should be sacrificed.

It's a good thing when you are cashflowing enough to outsource your work... I, on the other hand, am not in that position and have to do most of the work in house; UNLESS there is significant damage (even then, I have to beg for help). I transferred a resident that has been here 20 years and basically tilted the building over so he can roll his stuff across the hall. He was a heavy smoker and the walls were YELLOW! I had to rip out the flooring, replace all the appliances, and rip out the shower surround due to irreparable damage. It took my maintenance guy 2 weeks to complete AND I was able to get him help from another property for ONE day.

Unfortunately, unless I replaced the carpet/floor/paint within the last 6 months (I did a lot of that in the time window), I have NO records as to when it was done last; so I had to give residents who moved out the benefit of the doubt and assume that these were not new at the time of move in and not charge them.

I do have a sheet of flat rate charges I use when calculating damages and it is my practice to be fair when charging the account. The one thing in addition to damages I charge is in the event that the resident leaves without completing the initial agreement and they received a concession, I charge it back to them on the basis that the concession given was contingent upon completion of the original agreement. I do also charge for legal fees as appropriate. Unless I have a payment plan in place, I send the file to the collection agency immediately upon completion of the charges; if the resident fails to comply with the agreement; I send the file then. If this is a case where I had to bring in legal and was awarded a judgment, I have the attorney handle collections.