One of the costliest things to a landlord is having a property sit vacant for an extended period. Even just one month with no rent coming in can kill your bottom line. And although vacancies are inevitable in this business, there are things you can do to help keep your property occupied and producing income. The following tips show you how to minimize your rental vacancies.
Be proactive near the end of a lease
Reach out to your tenant well in advance of their lease expiration to see if they plan on staying. If they do plan on staying, negotiate any changes in terms and draw up the new lease to have them sign ASAP. Keep in mind that certain changes, such as raising the rent, require proper notice. If you plan to raise the rent by less than 10 percent, you must give the tenant 30 days notice, but if the increase is over 10 percent, you must provide them 60 days notice.
If your tenant plans on leaving, the easiest way to minimize your rental vacancies is by advertising the property 30 days before they move out . Make sure to discuss with them your plans to show the place to prospective tenants with proper 24-hour notice. (Make sure you have a clause in your lease that allows you to show the property once the tenant provides a 30-day notice.)
One question we receive a lot from homeowners is “Do you recommend showing the property even if the current tenants live like slobs?” The answer is YES! Your goal is to minimize your rental vacancies!
I would rather take my chances showing a messy property than wait 30 days to start the process. If the current tenant is messy, as you show them the property let the prospective tenant know what work is to be done once the current tenant moves out. And remember, most people can see through a tenant’s clutter and imagine how a place will look with their personal belongings.
If you are prepared and act in advance, you can minimize vacancies (the time the current tenant moves out until the new tenant moves in) by having someone ready to move into your property as soon as the unit is repaired and cleaned without losing out on much rent.
Receiving a 30-day notice
The following are the steps we take as soon as we receive 30-days notice. By following these steps we have a new tenant moved in and paying rent within five days of the previous tenant moving out.
Immediately after the final walkthrough, we contact our vendors with approval to begin work. Remember, our vendors are ready to go as soon as they receive final approval since we notified them of potential repairs after the initial inspection we did on day 15 to avoid delay.
Price the Rent Competitively
Before setting your rent, look at the current market price for similar properties in the area and price your property competitively. You can bet that prospective tenants know the current market rent because they are out looking around, searching for the best deal. Keep in mind that the “best deal” does not mean the cheapest rent. If you price the rent too low good tenants will be wary and assume there is something wrong with your property yet if you price the rent too high it will cost you money in the end since properties with higher rent take longer to rent out. You need to find the Goldilocks amount to charge – not too high and not too low.
Aim for long-term tenants
One way to minimize your rental vacancies is to choose tenants that are in the market for a long-term (1 year or more) place to live. While long-term tenants usually rent houses instead of apartments, many people will happily stay for years in any property if it is comfortable and they are treated right. To determine if a prospective tenant might be long-term, pay attention to the following during the screening process:
How long have they lived in the area?
How long have they been at their current job?
How long did they live at their prior residence?
If they have been at the same job for a while and lived in past places over a year, they are more likely rooted in the area and likely to stay longer. And if you already have great tenants in place try to keep them longer with incentives to resign a lease such as little to no rent increase.
Marketing your rental
Take the time to write up a detailed description of your property and the surrounding neighborhood, highlighting any amenities and unique features they have. Include clear, well-taken photographs of your property because often prospective tenants gloss over listings that lack photos. Although taking pictures and creating an attractive listing is time-consuming, keep in mind that more than likely you will be able to reuse the photographs and descriptions the next time your property becomes vacant, so it is worth the extra effort. Once you have your photographs and listing perfected, upload it to all the major websites for maximum exposure.
Here are a handful of websites we use to market rental properties:
Put out signs
An old standby that is still effective at attracting tenants is putting a “For Rent” sign in front of your property. Even with the internet lots of people still drive around the areas in which they wish to live looking for potential places to rent. Invest in attractive, easy to read signs to place in the yard.
An attractive property will stand out since people want to live in beautiful, homey places. Spend a little time and money on landscaping. Paint the property an inviting color and keep it looking fresh. Keep the property clean and tidy. People not only want to live in attractive places, but beautiful homes are also likely to attract better tenants who are willing to stay longer.
Sell the place, don’t simply show it
When showing your property, don’t merely show it but sell it to prospective tenants. Talk up the unique features of the neighborhood and the amenities your property has to offer. Sell them on why someone would want to live in this particular property in this specific neighborhood over anywhere else. Not only does this create excitement about your rental but it creates a sense of urgency since prospective tenants know that great properties get taken before others.
Answer the phone
If your property is vacant and you have it advertised for rent be ready to answer the phone and respond to email inquiries immediately. Remember, prospective tenants are usually in a time crunch, and yours is not the only property on their list of potential candidates. While some might leave a message, I guarantee you they are calling the next property on their list immediately after and will view the property of the person they speak to first. If you are worried about spending all of your time on the phone, answering calls that might not be prospective tenants, consider downloading an app like google voice that allows you to have a separate phone number for your listings to call that way you know it is a prospective tenant before you answer.
Don’t obsess over renting at the first of the month
A tenant can technically move in at any time of the month, so don’t lock yourself into thinking you have to have someone in on the first or the whole month is shot. Get the unit ready to rent within five days of whenever the current tenant vacates and prorate the rent according to when the new tenant moves in, whenever that may be.
Be a good landlord
One way to keep good tenants, and thus minimize your rental vacancies, is to be a good landlord. This means being timely with appointments and repairs and being available while maintaining a healthy distance, so your tenants don’t feel like you are watching their every move. Being a good landlord not only helps keep good tenants it makes your current and past tenants more likely to recommend you to friends.
Vacancies on a problematic property
Offer paid utilities
Some properties are harder to rent out than others and require a few extra incentives to get a tenant in place. One way you can make such a property more desirable is to offer paid utilities such as water or heat. Most renters are on tight budgets and having a necessary expense included in a fixed cost can be the deciding factor between your property and a comparable one.
Offer referral fees
Another way to find good tenants quickly is through referrals. If you have good tenants who are moving out, offer them a referral fee if they refer a friend to you who ends up renting your property. Paying a couple of hundred bucks in gift cards or cash for a good tenant is much cheaper in the end than losing out on a month’s rent, and good tenants most likely have friends who will also be good tenants.
One way to set your property apart from others is to provide amenities that other rentals might not have, such as a washer and dryer. It also helps to keep the other, standard appliances up to date and clean. And you don’t have to break the bank to provide these additional amenities. Look into purchasing refurbished appliances or slightly dented appliances from an overstock or outlet store in your area at severely reduced rates.
Consider move-in bonuses
Offering move-in bonuses such as a microwave or “free rent” can also set your property apart from others. Like referral fees, spending a couple of hundred dollars on a small gift is nominal compared to losing a month or two’s rent.
Vacancies are an inevitable part of owning rental property, but by being proactive and putting forth a little effort, you can minimize them, so they don’t destroy your bottom line.
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