The short answer: normal turnover is good, but vacancy should be kept to a minimum.
I have managed rental properties in the Tacoma, WA and surrounding areas for over 16 years. Which has allowed me to see some of the mindsets that can lead an owner down the rabbit hole of loss or lead an owner being successful. I define success as a rental property owner or rental estate investor, as creating wealth through real estate.
One of the pit falls I have seen landlords make is being too afraid of vacancy that they neglect essential functions of management. For instance, an owner may keep rents way under market value fearing that the tenant will move out. Rental Vacancy and Turn Over should not be confused, one is good, one is bad.
Turn over is a healthy part of having a rental. Turn over allows an owner to have a change to make preventative maintenance, repairs, deep cleaning, carpet cleaning and landscape clean up that otherwise would not be done. This is healthy for a rental house as it keeps the overall assets in good shape. Now too much turn over can be a sign of an issue with the home or the management of it. But turn over every few years keeps an investment property in better conditions and therefore more valuable.
I often hear owners say things like, “my tenant has been in the rental for ten years”. While this may seem like a good thing; the truth is that the owner is most likely not maximizing their rents and has a ton of deferred maintenance to deal with the tenant does finally move out. Since normal wear and tear cannot be charged to a tenant, you must allow more wear and tear the longer the tenant is in the unit. In other words, if your tenants are in the home for a decade or more, you are most likely going to have costly upkeep and repairs to do when you do have turn over.
Vacancy costs owner’s money, so it should be kept to an absolute minimum. It is critical that a manager [if you are a do it yourself owner, then you are the manager] starts advertising a rental home as soon as they know the current tenants are moving out. This will keep vacancy low. Now it can be a lot of work getting access to show an occupied rental house, but it is worth the effort. If for instance your rental rents for $1650 a month, then a vacancy is costing you $55 per day.
If you have a rental property do not be afraid of turn over. See it as your chance to keep your investment in good condition and to keep your rents at market rates. Just make sure you have a good strategy for advertising and quickly re-renting the home to reduce the cost of vacancy.