Most of the expense and frustration associated with your rental property will come during vacancies. Vacancies are stressful because you’re not earning any income on a home that isn’t occupied, and at the same time, you’re spending money on it. Without a tenant, you have to pay for the utilities and the cleaning and the upkeep.
Today, we’re talking about how to reduce the number and the duration of vacancies with your rental property.
Pricing your Home Effectively
For a normal rent-ready property, the biggest factor in determining how long your vacancy will last is your listing price. There is a renter for every home when the home is priced right.
Start by checking current listings in your neighborhood that are of similar size just to see where other listings in the area are priced. Your price should fall close to that range. Some landlords are tempted to slash the price well below market value in order to have their pick of applicants. Pricing extremely low isn’t always helpful. And, it can lead to confusion when you try to bring the price up to market value at a later date. When owners choose this strategy, you see tons of applicants, but the applications usually do not qualify from an income or credit perspective.
On the other side of the coin, some landlords get a little too aggressive or optimistic about pricing and end up a lot higher than market value. When something is priced too high, it’s an instant turn off. Often times we see beautiful rentals sit for long periods of time simply because the owner was going for an unrealistic price.
If you are not receiving a few inquiries each day or you have not received an application after two or three weeks, you are more than likely priced too high and it’s probably time to consider a price drop. Consider dropping it $25 to $50 at a time until you hit the sweet spot and the interest picks up.
Provide a Rent-Ready Property and a Solid Lease
Once your listing is up and running, it’s time to make a good first impression. Make sure you complete your repairs before showings start and definitely before move-in. Once you have secured a tenant and you are prepping your lease materials for signing, be fair and confident about what you are putting in your lease to reassure your tenant about your capabilities as your landlord. Go for annual leases so you have a least one year between now and your next vacancy.
As move-in day draws close, order a professional cleaning to start the tenancy on a positive note and also to demonstrate your expectations on how the home should be returned to you. Cleaning goes a long way to making the tenant feel comfortable in the home and optimistic about settling in for a long tenancy.
Maintenance Responsiveness is Key
After the renter is moved in and the vacancy period is over, the best way to keep your tenant in place and avoid another vacancy next year is to respond to maintenance quickly. Deferred maintenance can make a tenant duck and run after the lease is expired. When routine maintenance isn’t performed, it has drastic effects on the home that renters won’t notice until they are leased up and moved in. And most renters won’t be comfortable renewing a lease in a home when they discover that the maintenance has been deferred.
Keep in mind that lowering vacancies is actually one of the best ways to increase your rental profit. When you think about whether or not to complete a repair, think about whether the vacancy will be more expensive than that repair.
During tenant turnover periods, remember that updating the home attracts renters at premium rates. Your money is best spent in the kitchen, and don’t shy away from advertising your updates. If you have spent the time and money on updates, do not be afraid to brag about it on your ad descriptions. Other rent ready updates include flooring and window treatments as well as landscaping. Make sure you keep up with that curb appeal.
If you price it right, make a good first impression, and shine when it comes to maintenance, you will increase your rental profitability and reduce and shorten your vacancies. Follow these tips to navigate your vacancies like a pro.
If you have any questions please do not hesitate to contact us at Civitas Property Management.