1. Increase Curb Appeal
Stand back and look at your property through the eyes of a tenant. When you consider the rental amount you will be charging, is it inviting? Going beyond curb appeal, periodically ask your tenants: “Other than reducing the rent, what is one thing you would you do to improve your living unit”? You will typically hear something like, “Get rid of Unit #3 because they are up all night and play loud music.” A good tenant will tell you something obnoxious that could be cured with better management practices.
2. Take Steps to Avoid Credit Loss
When a property is occupied by a tenant who simply doesn’t have money to pay or opts to use the money for something else, that is known as credit loss. In some instances, there is little you can do—the tenant has lost a job and simply does not have money and you cannot get rid of them quickly enough. In other instances, your poor decision-making allowed you to accept a tenant who really did not have enough money to pay the rent consistently. Be sure to screen tenants out who are notorious in slow-pay or no-pay rent habits. Verify that the tenant is gainfully employed. Do they make enough to pay the rent? Most owners use a multiple of 3x the rent to income as a calculation. If you accept tenants who cannot meet this income ratio, don’t be surprised when you don’t receive the rent.
3. Don’t Engage in Loss to Lease
When your property is rented for less than what it would command today on the open market, then you are experiencing loss to lease. Many owners say that they keep the rents in their multifamily properties 10 percent below the market to stay full, but this effectively means a 10 percent vacancy factor.
4. Don’t Surrender to Vacancy Loss
When a unit in your multifamily property is not occupied and consequently not producing rent income, that is known as vacancy loss. Look at it this way: There are 52 weeks in a year, which means each week equals roughly a 2 percent contribution to a year’s worth of income. If your unit comes vacant and you do not immediately clean it, prep it, and get it ready for leasing because you decided to go on vacation for a week, then you have just volunteered for a 2 percent vacancy for the entire year.
5. Screen Tenants Well
This is becoming more difficult because of federal and state laws. The laws require you to process the first rental application received until you either approve or reject the first tenant before you receive the next application. All of that takes time and you have no option about it. Nevertheless, be sure to use an appropriate income ratio to best ensure your potential tenants can pay the rent.
Vacancy means lost income. Call or email me today at (541) 912-6583 or firstname.lastname@example.org to discuss ways to avoid vacancy.