Vacancy is a landlord’s greatest fear. Whether your rental business is your primary source of income or just a side hustle, the health of your cash flow is dependent on rent payments from tenants. The average cost of tenant turnover today amounts to $2,500 per unit. Even one unit sitting vacant is an expense you can’t afford.
Minimizing vacancy time can feel like an obstacle that can’t be defeated, but this is simply incorrect. There are a few key steps landlords can take to get their vacancies filled quickly and with tenants you’ll want to keep. To help you feel confident tackling this obstacle, we’ve put together 4 tips to minimize vacancy time on your rental properties.
Be Prepared and Proactive
When you know a unit is about to become vacant, don’t sit idly by and watch it happen. Being prepared and proactive can decrease or even eliminate vacancy. But what does it mean to be prepared and proactive? Mostly, it’s just staying on top of tenant’s lease end-dates and acting before there’s a vacancy to worry about.
When you know a tenant’s lease is about to end, reach out and discuss a renewal with them. It’s best to contact a tenant about 90 before their lease ends. If they’re considering leaving, you want to get to them before they settle on a new rental.
You can even offer tenants incentives to make resigning a more attractive option. Incentives can include slightly lower rent, free pet rent, a gift card to a local business, or anything else you deem appropriate. If you offer the incentive as a reward for renewing within 30 days after you make the offer, you’ll know earlier whether or not you need to start looking for a replacement.
If a tenant informs you that they will definitely be moving out at the end of their lease, list the property as soon as you find out. Acting quickly will protect your cash flow from the hazards of vacancy.
Maximize Marketing Efforts
The best way to efficiently fill a vacancy is to market well and do it early. Thanks to the internet, there are more resources than ever to help you market your vacancy. You just have to take initiative and capitalize on the resources available to you.
Your primary marketing options include online listing sites, paid searches, and print ads. You don’t want to spend too much money on advertising, but the more renters you reach, the better chance you have of finding good tenants.
In order to appeal to renters, you need to be sure your listings and marketing materials do two things: accurately describe the property and effectively grab applicants’ attention.
There are plenty of tips and tricks for writing the perfect listing (link to “How to Write the Perfect Listing”), but here are a few:
- Highlight the property’s best features.
- Be realistic about the drawbacks.
- Include high-quality photos of the unit.
- Do your best to use correct grammar and punctuation.
Screen Applicants to Find Quality Tenants
Your best bet to avoid vacancies is to find long-term tenants. If they don’t leave, you’ll have no vacancies to fill. Not only that, you can rely on good tenants to pay on time, adhere to the terms of their leases, and respect your property and other tenants.
Even if you’re in a hurry to fill a unit, you should avoid low-quality tenants and only sign the most qualified renters. To do this, you must perform thorough tenant screening. A rigorous screening process should include criminal, credit, and eviction history checks.
In order to be sure you’re complying with Fair Housing laws, you should consider implementing a tenant scoring system (link to tenant scoring article). This way, you know you’re not liable to any lawsuits or claims, but you’re still only signing the most qualified tenants.
Sell Partial Months
Sometimes everything works out perfectly; your current tenant can move out on the end-date of their lease, and your new tenant is able to move in on day one. Unfortunately, this isn’t always the case.
Maybe the new tenant’s previous lease doesn’t end until a few weeks after you want them to move in. Or perhaps your current tenant needs an extra couple weeks to get their ducks in a row. Whatever the case, selling partial months reduces the amount of time that your unit sits vacant.
When offering partial months to tenants, you must also offer prorated rent. The easiest, most flexible way of prorating rent for tenants is to charge by the day. To do this, simply divide their rent by 30. If your tenant pays $500 a month, they’ll pay $16.67 per day. You’ll charge them for each day they move in early or stay late.
As with any change to the original lease agreement, you should update the contract accordingly. If you know in advance that a tenant will need to move in before the start of their lease, it’s best to include their adjusted move-in date and prorated rent in the lease. This way, you have paper trails of all agreements and financial transactions.
Avoid Vacancy at all Costs
Collecting consistent rent payments from each of your units every month is absolutely necessary in order to maintain a successful real estate business — big or small. You should now be feeling confident in your ability to minimize vacancy time on your rental properties. Vacancy is simply an expense you can’t afford.