Property Management: The High Cost of Allowing Smoking in Apartments
One look at the restoration checklist that one remediation company has compiled for cleaning an apartment that has been heavily smoked in, and an apartment manager will likely shake his or her head.
Clean or replace if needed: floors, baseboards and trim, walls, ceiling, door chime, shelving, light fixtures, outlets and switches, closet organizers and rods.
The list goes on and apartment owners may be blinded by dollar signs.
One study conducted by UCLA in conjunction with the California Apartment Association suggested that costs of a thorough restoration of a two-bedroom apartment unit inhabited by a heavy smoker could cost in the range of $8,000 per unit. Think that’s high? Portland, Ore.-based Kennedy Restoration Co. says that, while individual units may vary, restoration of that same unit could cost up to $15,000.
Either way, costs are more significant than those associated with normal make-ready of a unit that has been vacated by a resident.
“To turn the unit, it costs at least 3-4 times more if the person in the unit was a heavy smoker,” says Eric Wiegers, California Apartment Association Senior Vice President Communications.
The additional expense comes from radical cleaning – or replacements – necessary to return the unit to a revenue viability.
The unit likely will require a deep clean that goes beyond scouring walls, cabinets and doors. Ozone treatment by generators that emit ozone gas (O3) may be needed to eliminate the stench from the air, walls, carpets, cabinets and fixtures. The process takes about 24 hours for generators to thoroughly push enough ozone gas through duct work to saturate the unit.
Sometimes, the carpet, padding, curtains, vinyl, counter tops and other furnishings are a total loss and have to be replaced. Floors, walls, doors, shelving and cabinets have to be repainted and sealed with odor control products.
“A lot of times the carpet and pad have to be replaced, then you’re talking about multiple layers of paint, twice the cleanup for the housekeepers, then odor treatment on top of it all,” says John Robinson of Denver-based Venturi Technologies, Inc. “It does become very expensive.”
It’s no secret that some of the largest operating expenses of a property result from residents moving in and out. Lost rent in addition to advertising and leasing expenses, plus maintenance between tenancies, add up.
According to turnover rate calculations created by SatisFacts and Multifamily Insiders, the average cost of turnover in an apartment is about $4,000, considering normal maintenance of a unit that leases for just under $1,000 per month. On average, the apartment sits empty for 40 days.
Adding an $8,000 restoration bill plus four additional days for the smoke remediation team to work, the turnover cost for the unit soars to $12,100. At an industry average of $947 for rent, the return on investment to lease out a restored smoke-damaged apartment is almost 13 months, nine more than normal.
Some properties are withholding deposits because extensive remediation is necessary on units vacated by heavy smokers. Damage caused by smoking is not normal wear and tear.
A study published last August by the American Journal of Public Health shows that California apartment owners collectively could save up to $18 million per year by implementing smoke-free rules. Smoke-related costs were reduced in half when smoke-free policies were in place at properties.
The absence of smoking also creates a healthier lifestyle. Cigarette smoke contains more than 7,000 chemicals, according to the U.S. Surgeon General. About 70 of them cause cancer.
UCLA’s researchers say that secondhand smoke results in about 4,000 deaths each year from ischemic heart disease and lung cancer. Additionally, secondhand smoke causes 31,000 bouts of asthma in children and is to blame for 4,700 premature infant deliveries each year.
Health concerns aside, smoking in apartments can be costly. Finding the balance between an occupied unit that produces top-line revenue and one that is consumed by turnover costs is a task that property owners today must face.
Is continuing to offer smoking inside apartments a worthwhile investment? If allowed by law, are you considering designated smoke-free apartments or banning smoking on your property all together? Let us know what you think.