There are many benefits to owning rental properties and being a landlord. Both the tax benefits and primarily passive income are great. However, being a landlord is not all sunshine and cash flow.
Many people shy away from owning rental property because of a potential vacancy, repair or maintenance. Vacancies are part of the business and inevitable. However, when properly managed, vacancy risk for a rental property is low.
I’ve been a landlord for five years. I also ran a property management company for almost three years. The portfolio I managed for other investors consisted of over 50 properties. During that time our vacancy rate was low and most properties enjoyed 0.0% vacancy rate. Collectively, the portfolio averaged less than 2.0% vacancy rate.
5 Tips to Fill a Vacant Rental Property
Turnover is impossible to avoid. At some point your tenant will move out. Thankfully, your tenant is required to give you notice of their plans to leave. Once your tenant says they’re leaving, you need to hit the ground running. The clock is ticking to find a tenant before your property becomes vacant.
1. Take advantage of free online marketing sites
Sites like Craigslist, Zillow, Trulia, and apartments dot com are great resources for finding tenants. All of these sites provide FREE advertising. That’s right, there is no need to pay for advertising for your rental property.
I’ve used all of these services to rent my own properties and properties I have managed for others. Through these free services, I found great tenants regardless of the property type.
Thats right – I’ve successfully found tenants for multi-million dollar penthouses, subsidized housing, and everywhere in between using free advertising.
When creating your ad, Spend the extra few minutes to make your ad stand out. Make the place sound appealing by up selling the location and amenities. Accurately describe the number of bedrooms and bathrooms. Include when the property will be available for your new tenant to move in.
Be sure to include pictures – lots of them. People love seeing pictures. Take quality photos as well. Nothing is worse than a dim lit room. A picture is worth a thousand words. Make your thousand words worth seeing in person.
Bad Ad: 5 bedroom house located in ‘x’ neighborhood. Call/email to set up showing. No pictures include. Rent $4,000/month.
Good Ad: Recently renovated, 5 bedroom/2.5 bathroom, rowhome with modern finishes in ‘x’ neighborhood. Granite counter tops and stainless steel appliances in the kitchen. Conveniently located near public transportation. Less than 10 minute walk to two metro stations. Several major bus lines on the corner. Steps away from dozens of bars, restaurants and two grocery stores. Backyard patio with built in benches; great for hosting BBQs. Washer/Dryer in basement. Available May 1st. Rent $4,000/month. Please email to set up showing. Tons of pictures included.
The two ads above are for the same property. Which one are you more likely to respond to?
2. Quick response times
Now that we have established how to market a property, lets discuss responding to potential tenants.
You will likely receive dozens of emails asking to see the property. Make a point to respond as quickly as possible. If possible, I respond the moment I receive the email notification. However, we all have lives and this may not always possible. I check emails every 2 hours like clockwork when I have a listing.
Waiting three days to respond is not a good plan; you will likely not hear back from the potential renter. You may have a great product, but I guarantee potential renters are looking at more than just your property. In this day and age people want answers and fast.
Hook potential renters by being responsive and scheduling a time to view the apartment as quickly as possible.
I send a generic note to all potential renters:
“[Insert name here],
Thank you for the interest. The property is still available. We are available to show you the property on [insert day of the week] at [insert time option one] or [insert time option two]. Please let me know if either of these times work for your schedule. The property is located at [insert address].
It’s important to stack your showings. Traveling to your property for a single showing is not worth your time. Your time is valuable and better spent elsewhere. Schedule back to back showings, or schedule as many showings within a two hour window.
Consolidating showings will be easier for you. This will also be easier for the existing tenant. You do not want to constantly put the existing tenant out.
When a tenant gives their notice, I thank them for their time and send them my move-out procedures. I also send the following note to the current tenant about upcoming showings:
As you prepare to move out, we are preparing to rent the apartment to the next group of tenants. To that end we will be showing the place as needed during the month, with advance notice to you. We will make every attempt to consolidate the showings into as few time slots as possible but of course have to also accommodate the schedules of the potential new tenants. To make the process work best, here are some guidelines:
1. Please have the place clean and ‘showable’ prior to the view times. Please have food put away, dirty dishes in the dishwasher, trash in the bins, clothes/laundry put away and general just clean and neat. We are not expecting you to get anything professionally cleaned or anything along those lines, just organized, if it’s not already so.
2. We will be escorting people through the apartment, however it is advisable to put any valuables or fragile items away and off of surfaces.
3. Please replace light bulbs that may have burnt out during your time at the apartment, if you haven’t been doing this regularly up to this point.
4. While not required, please try to be out of the apartment during the showing times. Years of experience shows that perspective tenants are more comfortable viewing a place when the current tenants are not lounging around. Their comfort relates to their interest, which helps accelerate the rental process.
Having stacked showings also creates the illusion of demand and breeds competition.
Showing times for higher-end properties should be further spaced out. Higher-end clientele want to be catered to and not rushed. They will appreciate the one on one time with you and do not want to compete for attention. Guide them through the property, answer any questions they have, and then give them space to explore. I recommend having showing times 30-45 minutes apart.
Showing times for group homes (professionals mid 20s-30s living together) require less time between tours. I have found touring multiple groups at the same time beneficial. I also recommend spacing showings every 15 minutes. As one group leaves, they see the new group arriving (and vice versa). This really creates a competition and shows demand for the property. In some instances this may lead to a bidding war for the property.
Showing times for lower or modest income places should be spread out. I’ve found that creating a competitive environment is counter productive in this space. At times, the less privileged find competition discouraging and it may deter people from applying. Spacing these showings out by 30-45 minutes typically works best. I’ve also found less punctuality from this tenant base. Many rely on public transportation, which can be unpredictable.
3. Quick showing times
If a potential renter emails you on Monday, do not wait until the weekend to show the place. Offer a tour after work on Tuesday or Wednesday. Get the potential renter to the property as quickly as possible.
If you are showing the property on the weekend, try and show the property earlier. Start at 10:00 am or 11:00 am. Most renters stop looking at apartments once they find a place they like. If you offer to show your place at 4:00 pm, you may lose a potential renter to a landlord that was showing his place at noon.
I always recommend arriving at the rental property at least 30 minutes before the first showing. Use this time to make sure the place looks good. If the current tenants are untidy, this gives you a chance to clean things up. People do not want to walk into a pigsty.
Use this time to turn on all the lights. Also, open all the blinds. This will help any place show better. People like natural light and well lit rooms.
No one likes a hot or stuffy apartment. Likewise, people do not want to be in a freezing house.
During the warm months, I recommend running the air conditioning when you arrive. Make sure the thermostat is set at a comfortable temperature. This will make potential renters feel comfortable while at the property. Likewise, during the cold months, I recommend running the heat.
5. Sell the place
Be positive, friendly, and energetic. Walk through the amenities at the property. Mention things like the apartment has central heat and air. Highlight the granite counter tops, high ceilings, and in-unit laundry. Show off features like closets and cabinet space.
Talk up the neighborhood. Ask the potential renter if they are familiar with the area. Explain to them why its a great place to live. Mention items like grocery stores, restaurants, public transportation and recreational facilities/trails.
After walking through the property, showcasing the unit, and up-selling the neighborhood – leave the potential renter(s) to themselves. This allows them to walk around freely and discuss openly.
Bonus tip: If you are not receiving a lot of interest from potential renters, you may be asking for too much in rent. Consider lowering the price a bit to attract more people. However, never be afraid to shoot for the moon on rents. You may be surprised what people are willing to pay for a quality place to live.
2 Tips to Avoid Another Vacancy
Having a vacancy is not fun. Over the years, I’ve found these two tips help reduce the potential of a vacancy.
1. 60 day notice period
Many lessons are learned the hard way in life. This is also true for landlords.
My original lease required tenants to provide written notice at least 30 days prior to the end of their lease. Normally, 30 days is plenty of time to find a new tenant. However, there were times I could not find a tenant to move in on such short notice.
With the rise of technology, we also noticed renters being more proactive. People are looking for places to live more than a month before their desired move in date.
All of our leases now require 60 days notice from the tenants. I highly recommend using a 60 day notice period. This gives you two full months to market the rental property and find a replacement tenant. Very rarely have I needed the entire 60 days. However, I rather have more time than less time to find a tenant.
2. Have your lease expire during peak rental season
Most people move between May and September. I call this ‘peak rental season’. Every market is different. For example, a college town may have a different cycle. Know your market.
Trying to rent a property during the winter or ‘off season’ can be challenging. Fewer people are looking to move which means less demand for your vacant rental property.
I have faced a few vacancies during the fall/winter. Thankfully, I was able to find renters each time this occurred. However, I did not want to encounter the same thing in 12 months if the new tenant decided to move.
Each time this occurred, I offered the tenant a short term lease of 6-9 months. This lease also had the option to renew for a full 12 months after the initial term.
Why? Well, the initial lease of 6-9 months would get me back to peak rental season. If the tenant chose not to renew the lease, I would easily be able to find a new tenant.
If the tenant did renew, I am still back on the summer rental cycle and enjoying a lease that will expire the following year during peak rental season.
This is a great way to avoid a vacancy because of seasonal issues.
Have you ever experienced a vacancy at your rental property? What tips did you find beneficial for finding new tenants? Maybe you are a rockstar landlord and do not have a vacancy. What tricks did you use to avoid a vacancy?