By Kim Schmitt, Managing Broker
November 21, 2019
“Why hasn’t my property rented out yet?” As a property manager, we dread questions such as this from our investor clients and thankfully it rarely happens! At Brio Properties, we utilize our experience in the rental market to keep our investor’s cash flow moving.
This article is for the investor who manages their own rentals who have found themselves having difficulties getting their vacancies filled.
In my experience, usually the reason for a continued vacancy is due to one or more of these reasons:
- The rent price is too high for the current rental market
- The condition of the unit isn’t up to par or has an undesirable feature
- The property location is a problem
- Security deposit is too high
- Tenant screening expectations are not realistic
- Poor marketing or poor applicant response time
SO, WHAT DO I DO? Well, here are some of my suggestions…
Adjust Your Rental Price
How did you come up with your rental rate? To help with deciding, you can get a VERY general idea by researching ADVERITISED rental rates for similar properties in your area via classifieds, Zillow, Trulia and even Craigslist. Please remember that just because these rent rates are advertised does not mean that they’ll get rented. This is just to give you an idea of where to start. Generally, you’ll want to pick a starting rate somewhere in the middle between the highest and the lowest.
Remember, the market will always drive the price. If you’ve had your property listed for a week and have not had anyone apply for it, drop the price a little. Then, drop the price again after two weeks if you still have no interest. You’re losing money when your home sits vacant. Don’t wait too long to drop the price. You must adjust the rent based on the competition and the market.
Improve Your Property Condition
You may be having difficulty getting your property rented because of an undesirable feature of the rental unit or of the property condition in general. If your rental’s condition leaves a lot to be desired, you shouldn’t be surprised that it isn’t renting. No tenants want to walk in and see stains on the carpet or messy touch-up paint on the walls. The exterior of your property could be keeping tenants from even coming inside to see the property. Undesirable features may be no laundry onsite, too may stairs, room size, not enough bathrooms, etc.
When it comes to the condition, it’s a better idea to spend a little money and improve the condition of the home so you don’t lose thousands while it sits vacant. Fixing it up will help you attract better tenants. The changes do not have to be complex or expensive. Paint, clean up the exterior, replace carpet and make sure the home is clean and presentable. In most cases, just as with location issues you may not be able to do anything about undesirable features other than price the rent accordingly.
Location of Rental Property
You cannot really do much to change the location of your property, but you can often work around it. Ideas would be that you may need to lower your rent rate, offer a 1-year lease signing special when advertising (Example: $200 off 2nd Month’s Rent), provide a washer and dryer, ETC. Where there is a will, there is a way!
Security Deposit Overkill
Tenant prospects may be fine with the monthly rent you are charging, but they may be turned off by a security deposit that is too high.
Two- or Three-months’ rent may be overkill, especially if all the other landlords in the area are only charging one month’s rent as security.
Tenant Screening Expectations
Tenant screening (Criminal, Credit and References) are very important and should be conducted by EVERY landlord!
It is important to have reasonable screening expectations based upon the property class in which your rental falls under. Property classes are defined as classes A, B and C or below and are based on a combination of physical, geographic and demographic characteristics. Just remember to have your screening policy in place and presented to all potential applicants. Stay consistent and stay within the federal and local laws to avoid Fair Housing violations!
Marketing and Responding to Applicants
It may be time to reassess your marketing strategy. Good marketing is yet another important consideration in getting your rental filled. You will want to use every available avenue to provide the most exposure. You will also want to make sure you take pictures (please make sure they’re not blurry or too amature looking) and write up a good description of the property and use a catchy tag line/heading to draw attention to your listing.
Communication is also important. You need to be prepared to answer questions from prospects and show them your rentals as quickly as possible once they show an interest. Remember, if you can’t, they’ll move onto something else. In this rental market, tenants have multiple options and they will not wait for you!
Summary
If your property isn’t renting as quickly as you’d like it to, consider working with a professional investment management company such as Brio Properties. Professional management companies have the knowledge, experience and resources to keep your rentals producing cash flow.