Property Management
What is 'turnover' in residential property management and how does it affect financial performance?
AThe annual rotation of property management firms
BWhen a tenant vacates and a unit needs to be prepared and re-leased; high turnover creates vacancy, renovation, and leasing costs that reduce cash flow✓ Correct
CThe profit generated when a property manager sells a building
DThe rate at which new leases replace expired ones
Explanation
Turnover refers to the process when a tenant vacates and the unit needs cleaning, repairs, and re-leasing. High turnover is costly: vacancy loss (no rent), renovation costs (paint, carpet, cleaning), and leasing costs (advertising, showing, tenant screening). Good property management minimizes turnover through proactive tenant retention—responsive maintenance, fair treatment, and competitive rents. Lower turnover significantly improves a property's net operating income.
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