If you want to be profitable with your rental properties, then you need to have a low vacancy rate. What does this mean? Well, the vacancy rate is the percentage of available units at any given time. You can calculate your vacancy rate like this:
(Average number of vacancies each month / Total number of rental properties)
This lets you know the average vacancy you will have at any time. Let’s say, for example, that you typically have 3 units available that you are trying to fill each month. And, you have 10 units in total. You calculate your vacancy rates like this: 3/10 = .30 or a 30% vacancy rate.
Make sense? While 30% in the example is very high, it is important to know the vacancy rate in your local market. From that, you will be able to tell just how your rate stacks up. Need to lower it? Here’s how you can do just that.
Keep Your Rental Price Fair. If the average rental price for a similar unit in your area is $1,000.00, but you rent yours for $1,500.00, then you are going to turn potential renters away. Do your research and make sure that the fee you are charging is comparable to others in the area.
Maintain the Property with Upgrades and Repairs. New tenants are looking for a property that is well-maintained and cared for. If they come to see the property and it looks like it hasn’t had any attention in a while, that’s a good indicator to go elsewhere.
Keeping a property well-maintained shows that you care for it and, should they become your tenants and have an issue down the road, you will be right there to do the repair.
Offer Incentives for Longer Leases. Tired of tenants leaving after one year? After a year, you are left with the cleanup and turnover for the next tenants. Or, for a long wait and vacancy. Keep tenants longer – and lower your vacancy rate – by offering incentives. This may be a discounted month of rent, a free electronic device, gift card for local stores/restaurants, or even waiving the pet fee.
Conduct Exit Interviews. How can you know why tenants are choosing to leave if you don’t talk to them? Keep the lines of communication open so that when they do decide not to renew their lease, you can find out why. Ask what they liked, what they didn’t, and what they think can be improved. This is the best indicator of things you may be able to do to keep the next tenant longer.
Your vacancy rate is important if you want to be a profitable landlord. If you find yourself with a higher-than-average rate, try taking these steps and you will find that it will likely decrease. When it does? Your profits will go up.
Marina Shlomov, a managing partner at ALH|Podland Rental Homes Property Management is the author of many articles on Landlording, Property Management, and Real Estate Investing. A residential builder in the state of Georgia since 1999, Marina is an investor herself. Her property management company is intended “For Investors” and “By Investors” for a simple reason – she knows what investors’ goals are and she works hard to reach their goals. In her spare time, Marina likes to spend time with her family, friends, garden, read and travel. Check her out atwww.alhpodland.com. You can find Marina’s articles and comments at @rentalhomesatl on Twitter, on Facebook, Google+, Blogger. and YouTube, Bigger Pockets and REI CLub and LinkedIn.