Tenants Who Smoke – A Slightly Dirty Love Affair

AshLike most landlords, I have a love/hate relationship with smokers. They’re usually great tenants, pay on time and tend not to move as often as their fresh-air cousins. The hate (really, more of a dislike) comes when they move and it’s time to re-rent or sell. Flooring, paint, washing, ozone, and lots of fresh air. I’ve even had clients scrub walls with the commercial cleaner TSP (which I used to use when I worked in biology labs) to try and remove enough tar so that primer could adhere to the wall.

In the September 2013 issue of Canadian Apartment Magazine Chris Seepe does a quick summary of a couple issues facing the owner or manager with smokers in their buildings or who wants to go smoke-free. One part stood out to Edmonton’s market, currently seeing huge number of multi-family (condo) projects on the go, with the first new dedicated rental buildings in decades appearing on the outskirts of town. A survey undertaken by the Ontario Tobacco-Free Network showed that (in Ontario) 2 out of 3 people would choose to live in a smoke free building if the choice was available.

It’s tough to monitize a statistic like ‘2 out of 3 would choose’, so let’s consider the costs of turnover and the costs of lower rent. In the article Mr. Seepe suggests that it costs $650 every time you’ve got to clean up a one bedroom smoker unit – $450 on paint, $100 on carpet cleaning and at least $100 to clean all other surfaces, including windows, mirrors, balcony doors, closet doors, kitchen cabinets and appliances. If that tenant goes after a year, you’ve effectively dropped your rent by $54.17 per month.

I think it’ll be $1500 on paint and carpet, plus cleaning.

Speaking from three generations of apartment building ownership, if you were going to re-rent without doing a lot of work, you’d be looking at a $25-$100/month discount. That’s also assuming you could re-rent it to a light smoker. However, we’re in a very anti-smoking society and the majority of light smokers I know are quick to say they’d like to quit – making them unlikely candidates to move into a heavy-smoker unit. You should just keep the old tenant and leave things along. Smoking isn’t even close to being one of my 10 terrifying tenant issues.

New buildings, those recently renovated and buildings where you’re looking to turn around the tenant profile will see an even more profound discount or premium. Just like strong cooking smells, second hand smoke in the halls will scare off many students or people new to town who are looking to rent while they get established. As a REALTOR, I’ve seen many buyers choose significantly more expensive properties because they can’t find anything in their price range that isn’t coated in smoke. They’ll move from wanting cheap detached to brand new condos just to get away from the smoke.

I think there’s a niche for C-class buildings that will stay that way and be accepting of smoking. They won’t be a star in the current market but when things slow down they’ll be steady.

Are there any owners or brokers out there with experiences going pro-smoking to anti-smoking? Anyone got numbers of their own?

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