When your rental property is occupied time is on your side. The rent checks come in every month. You pay your bills, and get to keep what’s left over.
When your rental property is vacant, time is sneakily and relentlessly draining your bank account.
Vacancies are the single biggest problem for rental property investors. When your house is vacant, you are losing money every day. The money might not physically come out of your pocket everyday, but you’re accruing tax, insurance, maintenance, and interest fees. These fees are stealing from your bottom line. Vacancy also increases the threat of theft and vandalism at your property.
So vacancies are bad. We need to fill our rentals and keep them filled as much as possible. How do we do this?
There are two ways to approach this problem:
- Increase the length of time that your tenants stay in your properties.
- Decrease the length of time it takes to fill your property with a new tenant.
Here are 8 tips to do just that.
Longer Stay
Screening – They say screening on the front end is the most important part of strong property management. One factor you can evaluate potential tenants on is their historical length of stay. The idea is that the longer they stayed at their last residence the longer they’re likely to stay at yours.
Longer Leases – I know investor’s who use 2 year leases exclusively. I’ve used them before, but I may begin using them for all rentals.
Proper Maintenance – Taking care of your properties can go a long way towards making tenants want to stay. When there’s a real problem, fix it promptly. It shows that you care about them, and about your property. It should encourage them do the same.
Section 8 – I’ve been searching for hard data on length of stay for section 8 compared to market rents. So far I haven’t found it. So this point is based on anecdotal evidence. Section 8 tenants have to cut through a lot of government red tape to move out. They have to re-qualify, and risk moving to a less desirable home than the one you’re providing. Most people I know with section 8 tenants have had them for 5+ years. In most area’s the average stay for market rate tenants is around 2 years. I’d love feedback from anyone who has hard data for this. Here are some other things I learned about Section 8 in Birmingham.
Shorter Gaps
Market Heavily Online – I market my rentals heavily in a few different places online. I discuss some of the websites I use to do that here and here. The result is that all of my vacancies have been filled in under 3 weeks. Your potential renters are looking online. As a landlord you need to be there.
High Quality Pictures – Great pictures can really make the difference in attracting the right tenants quickly. I use Pic-tap-go on my Iphone to quickly edit and upload listing photos.
Rently Boxes – I haven’t used these, but have heard great things. They allow potential tenants to provide an ID and credit card number in exchange for viewing your rental at their leisure. It cuts out the need for a person to be there showing a property. Currently I use an “open house” method of doing showings. If I get tired of that, I’ll definitely try Rently.
Rehabs – This could go in both categories. Making your units attractive and clean will help attract quality tenants fast, and keep them there longer. It doesn’t take much to rise above the competition in this category. Paint is probably the biggest difference maker.
Thanks for reading! I’d love to hear what idea’s you have for reducing vacancies and making rentals more profitable!