Welcome back to our blog series covering all things vacancies.
In part one of this series, we lay out what vacancy rate is, why vacancies lose you money, and how to calculate it in your rental investing business. If you missed part one of this blog series, you can check it out here. >>
Now that you understand what it is and how to calculate it, it’s important to find ways to proactively decrease vacancy rates in your business. This is what we will cover in part two of our series.
In this article, you’ll learn three ways to decrease vacancy rates for one rental property or across your entire portfolio. Be sure to read through and refer back as needed, as there are a lot of nuances that we’ve picked up over the years managing thousands of properties for owners like you.
You won’t want to miss it!
NOTE: To give you better insights into the processes and procedures necessary for each stage, this article features insights and quotes from a property management expert, Leslie Wilson, CAM®, a seasoned residential property manager with Evernest.
Table of Contents
The single-greatest way you can limit vacancies and decrease the vacancy rate at your properties (and the first thing we suggest to investors and landlords)? Maximize renewal rates.
If you’ve found great residents who…
— then do yourself a favor and avoid the stress of placing a new resident. Especially when you could focus on retaining the great one you already have.
Lease renewal rates in the U.S. reached record highs in 2020 during the COVID-19 pandemic, and seem to be continuing, with many renters now priced out of homeownership. If you are struggling to get renewals at your rental property, here are some ways you can keep residents long-term.
First impressions matter…a lot. And trust us — residents do remember.
That’s why making the move-in experience as positive and seamless as possible is critical step #1. To help make move-in positive, always make a point to:
Moving isn’t fun. As a landlord, the more you can mitigate the stress for new residents (within reason) the better. A resident move-in package can go a long way for renters. It might include things like:
The most common reason we’ve seen residents give for not renewing their leases has to do with maintenance. Usually, slow responses to maintenance requests, to be exact.
As a landlord (if you don’t have a property manager in place), you need to respond to maintenance requests promptly and communicate effectively with residents about their requests. One thing we suggest every landlord have in place is a system for fielding requests.
At Evernest, we use a system called Property Meld, which is one of the biggest benefits our owners enjoy while working with us. Leslie Wilson says,
“With Property Meld, if there’s an emergency work order, we’re going to be notified of it. We have MCs that are viewing all incoming tickets. But more important than that, even though we’re closed on Saturday and Sunday, our owners have direct visibility of any incoming tickets. So if there truly is an emergency, they’re not having to wait until Monday, if an emergency happened on Saturday, to be notified of it.”
A perk of working with a property manager like Evernest? We have a dedicated resident communication department. Their sole responsibilities revolve around connecting and corresponding with residents. Working with a dedicated resident communication team gives residents more attention and agency than other companies or models — increasing the likelihood of renewals.
Our third suggestion for keeping residents long-term — take note of common complaints from your residents, and be proactive in finding solutions to these issues.
Keep in mind, regardless of the kind of complaints, making residents feel heard is big for the landlord/tenant relationship. It may seem like just another tedious thing you have to do, but trust us, it goes a long way.
If multiple residents are requesting similar updates or amenities, carefully weigh the pros and cons of all reasonable requests. When residents do move out or decline to renew their lease, create a protocol to ask them why they are leaving and/or what it would take to get them to stay. The information you learn will help you keep future residents around longer, and potentially help you resolve a simple issue that will persuade your current residents to stay (Source).
Due to current issues like inflation, people are more and more price-conscious in general. This is where, as landlords, finding creative ways to nudge your residents into renewing their lease can play a huge role in retaining them.
One way to do this is through incentives. This can include:
Incentives have the power to increase renewal rates — plain and simple.
You may be thinking, “But what about the up-front, out-of-pocket costs for these incentives? Is that really worth it?” Good questions. Our answer?
You will be better off keeping a high-quality resident in your rental than footing the bill for turnover costs. Every time.
Increasing rent is a natural part of owning rental property — it keeps your property competitive and at market rate, attracting better residents while earning you more over time.
In today’s market, there is a need for some caveats to be made and honest questions to be asked on behalf of owners/landlords. Because, the reality is, that homes are too expensive for many. Meaning more people want and need to rent.
Since this is the case, it also means more people would be willing to rent long-term if it was affordable. So, when considering raising rents, ask the question:
Is increasing rents worth losing a solid resident?
One way to approach increases is by building in small percentage increases year-over-year. For example, the standard rent increase at Evernest each year is 5%. Note that in today’s market, realistically, that would be 8%, 10%, etc.
So, some further things to consider/keep in mind in today’s climate:
The sooner you can reach your residents about renewing, the better. People move, it comes with the territory. But there are some ways to reach them before it’s too late to try and get a renewal.
Here are a few suggestions:
At Evernest, we handle the end of a tenancy in two different ways. Here’s how.
1. If the resident gives notice:
2. If the owner gives notice:
In general, year-over-year lease renewal is the best way for landlords to avoid resident turnover and keep vacancy rates low. However, an important step in the lease renewal process is determining whether or not you want a resident to stay at your property. If you’re dealing with irresponsible or difficult residents, it may make sense to find a better fit in some cases.
You can do everything right as a landlord, but evictions do need to happen from time to time. And naturally, this causes vacancies. There are a few things we suggest owners keep in mind when their vacancy is brought on by the need to evict:
The last thing you need is a delayed vacancy. By checking the property regularly and taking possession of the property as quickly as possible, you’ll be able to fill the vacancy a lot sooner.
For more on how to handle evictions, you can keep reading here.
Dialing in your process of screening potential residents plays a huge role in lowering your vacancies. As the homeowner, you should never overlook this step of the rental application process.
To conduct a thorough screening, we highly suggest you use a process similar to ours:
Another suggestion — especially today, with high inflation, an increase in rental scams, and the like — is that you need to look for applicants with income that is 2-2.5 times the monthly rent (on the low end).
Here’s what Leslie had to say about our screening process and how we thoroughly vet potential residents:
“We are going to conduct a criminal background check and a full credit check. Underwriting will also complete a rental verification, which is pretty extensive, to ensure that there are no balances on the credit report that had anything to do with either an eviction or a collection’s rental balance. They will also do a thorough rental verification if indeed any prior addresses are verified as rental addresses on the application.”
Paying a property management company can be very beneficial to do things like running background checks, credit checks, rental verifications, and employment verification. This ensures your screening process is thorough and you’re placing well-qualified residents.
The biggest reasons properties sit on the market and don’t lease quickly?
This is why we’ve built a fairly in-depth approach to marketing every property we manage. It focuses on three parts: taking great photos, getting traffic to the listing, and converting prospects into residents.
(You can actually use the very checklist developed by our professionals here.)
People will ignore your listing if your photos are horrible (sorry, not sorry). Here’s how to avoid that:
More on picture order — don’t forget some people still judge a book by its cover. There can be some not-so-nice houses on the outside, but they’re totally redone on the inside.
Be sure to pick the best picture that highlights the product – sometimes that’s the kitchen. Sometimes, in an open-layout home, that’s a shot from the front door that shows the entire living room and kitchen in one. More often than not, it will be the kitchen or living room, if not the front of the house, but always tailor your approach to the home at hand.
For more insights, you can download our checklist here.
It’s best to figure this out on the front end. You don’t want to put your house out there before you’ve figured out your traffic plan.
So, let’s talk about some easy ways to drive traffic to your house… going from most obvious to least obvious.
1. Yard Signs
If you happen to live on a street with a lot of traffic, a yard sign can be extremely effective.
2. Newspaper
Newspaper ads aren’t nearly as popular as they used to be, but there are still people who look through the Sunday paper to see if there are any houses for rent.
3. Craigslist
There are many more modern ways to advertise for new residents, but yes, Craigslist is still an option.
4. Zillow, Trulia, and Realtor.com
“When in Rome…” Love them or hate them, everyone is looking at them. You must be listed on their sites. Postlets.com gives you an easy, free way to be on multiple platforms at once, you simply need to create an account.
5. Facebook
We’ve found one of the greatest marketing tools is marketing the home to your friends on Facebook. After all, isn’t it fun to help a friend out? Just imagine, if someone connects you to a resident – who is also their friend – they get emotional credit for helping two friends. Never underestimate the value of friends helping friends.
It’s important that you’re regularly inspecting your property DURING the active marketing process. If your property is on the market longer than 10 days, you will need to clean it, cut the grass, and complete any other necessary tidying to keep your property looking good.
Make sure that you’re regularly updating pictures, ad descriptions, etc. Chances are if it has remained vacant for 10, 20, or 30 days — you need to update your marketing efforts (and that’s the best-case scenario).
There you have it — three (well, maybe a few more) ways to decrease vacancy rates for one rental property or across your entire portfolio. We suggest you bookmark this article and refer back to it every now and then to be reminded of the nuances of decreasing vacancies.
(In case you missed part one of our series, you can check that out here.)
As we mentioned above, it’s important to find ways to proactively decrease vacancy rates in your business. One way to do this is by hiring a local property manager. Property managers exist to be the go-to local resource for investors and landlords. When you hire a good property manager, they put into practice all we mentioned above — making them one of the best investments you can make as an owner.
If you want to reduce vacancies and increase renewals at your property or across your portfolio — start the conversation and schedule a call here, today. >>
______________________________________________
Leslie Wilson, CAM® is a seasoned property manager with 17 years of experience within the property management industry, and currently works as the Institutional Property Manager at Evernest. She has experience managing student housing and multi-family and recently transitioned into the single-family rental market. She currently serves owners as their liaison between multiple departments and manages their accounts both personally and professionally.
Start the conversation!