Vacancy is the bane of every landlord’s existence and typically, the most costly part of owning rental properties. After all, it’s difficult to make any profit when there is less revenue go in to, and more expenses coming out of your pocket. With homes becoming increasingly more affordable, it’s important to do everything you can to reduce vacancy rates. In order to have a successful real estate investing career, it’s critical for owners to lower their turnover rate as much as possible.
In today’s market, owners should have no longer than a two to three week vacancy period with their unit. It shouldn’t take any longer than that. However, if your rental unit remains vacant for a longer period of time, it’s generally because of three things: Price, curb appeal and availability. While there are plenty of reasons for high vacancy rates, it’s generally those three reasons, detailed below, that affect the outcome the most:
Owning rental properties is a competitive business, and it’s important to know your market. If your unit is overpriced, your phone will not ring and you will not receive any responses to your ads. When it comes to pricing, you typically want to be somewhere in the middle of the road; not the highest one out there.
For example, if there are four properties in your area on the market for $200 less than yours, you’re not going to get any applicants. In these situations, we, at Action Properties in Roseville, suggest reducing the rent down by $50 to $75 and do so for a testing period of five to six days. If you start receiving calls and are already showing it within those five to six days, then you’ll know you’re in the correct price range.
2. Curb Appeal:
First impressions count for everything. When prospective tenants drive-by they want to see a manicured landscape and a freshly painted building; otherwise they’ll keep on driving. Be sure your property always presents a positive situation for potential tenants. So, make sure the property is in good, clean order to make the best first impression when showing.
A vacant rental property is not only a hassle, but affects your cash flow as well. If you want a tenant in the home as quickly as possible, you, or the property manager, need to be available at all times to show the property to prospective tenants. If you’re not out there aggressively pursuing quality tenants, you lose out financially. Don’t leave it to chance to find a good tenant. Go out there, find the best applicant and be available for them.
Owning rental property is a great way to build wealth for retirement, so make sure you take the steps necessary to ensure your property runs at a higher occupancy.
As always, if you have any questions, feel free to contact us.