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.
1. Focus on Keeping Residents Long-term
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…
- Pay rent on time
- Take care of your property
- Abide by the terms in the lease agreement
- Amongst a few…
— 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.
Create a positive move-in experience
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:
- Clean the unit thoroughly
- Provide utility information
- Include parking rules and regulations
- Provide rental insurance information
- Provide rental management contact information
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:
- Informational binder – This binder contains useful information regarding utilities, parking, resident rules of conduct, keys and codes, a protocol for maintenance requests, rental payment schedules, and legal forms (such as a copy of the resident’s lease).
- Move-in kit – Since moving day can sometimes be a hassle, a forward-thinking landlord might provide a small, inexpensive box of goodies, such as cleaning supplies, toilet paper, paper towels, air freshener, etc. And if you also happen to have professional moving blankets, you might loan them to the new residents (the blankets will help the walls and floors from being scratched up).
- Welcome gift – It’s always nice to receive something you weren’t expecting. A Starbucks gift card, for example, is a nice, inexpensive, and welcoming gesture, which can pay dividends down the road in improved renter-rentee relations.
Handle maintenance issues quickly
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.
Keep tabs on common complaints
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).
Offer incentives for renewing
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:
- Parking benefits
- Cash, or gift cards
- Free carpet cleaning
- Upgrading the blinds
- Gifts like a new television
- No/minimal rent increases
- Offering to paint an accent wall
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.
Be aware when raising the rent
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:
- Do cost analysis on renovation costs, vacancies, etc.
- It’s almost always cheaper to keep residents in your home than to increase vacancies
- More than ever, it’s important to show residents that you’re an everyday person with a normal job. Be aware of how “money-hungry” you are as an investor/landlord.
Reach out about renewals early
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:
- Present incentives (as discussed above)
- See if they have special requests and if you can meet them
At Evernest, we handle the end of a tenancy in two different ways. Here’s how.1. If the resident gives notice:
- Internally, this triggers tasks like waiting for a move-out date, key remittance, occupancy check, etc.
- In the case of an eviction, once we have received keys, the first thing we do is change locks, which are reflected on the resident’s credit, ensuring no chance of re-entry and keeping residents from easily renting the next time.
- Once we have keys, we will turn utilities over to Evernest.
2. If the owner gives notice:
- We ask 120 days before the lease-end if the owner wants to renew with their resident.
- If they say “no”, we serve the non-renewal notice to the resident.
- If the resident is a subsidy (section 8, etc.), we notify the proper authority that we’ve given a notice to vacate so that they can create the move-out voucher for the resident.
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.
In the event of an eviction
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:
- Regularly inspect occupancy in the process of an eviction
- More times than not, people leave before remitting keys, etc.
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.
2. Dial-in Your Resident Screening Process
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:
- Credit check
- Criminal background
- Income verification (additional layer of protection)
- Rental verification
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.
3. Market Your Property Effectively
The biggest reasons properties sit on the market and don’t lease quickly?
- Curb appeal
- Interior cleanliness
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.)
Steps to take great photos of your house
People will ignore your listing if your photos are horrible (sorry, not sorry). Here’s how to avoid that:
- Don’t take portrait shots, only shoot landscapes. With a solid wide-angle lens, you should be able to get each of the rooms in a single shot.
- Delete blurry pictures. No one wants to see blurry pictures, and they will deter people from coming to see your home.
- Open closet doors
- Make sure all lights are on and blinds are all in the same order.
- Remove family photos or any decorative items.
- Take your photos on a sunny day. Let the natural light help you as much as possible... open windows and allow light to fill the room. If you can, turn off the overhead lights.
- Make sure your images are large enough. If your photo doesn’t have a high enough resolution, all of your pictures will look pixelated... that’s not good.
- Make sure the picture order is:
- Front of the house
- Kitchen (at least two or three photos)
- Den
- Bedrooms
- Bathrooms
- Bonus rooms
- Backyard
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.
Getting traffic to your listing
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.
BONUS: Inspect Your Vacant Property Regularly
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).
Decrease Vacancy Rate And Increase Renewals with Evernest
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. >>______________________________________________
Contributor: Leslie Wilson
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.