How Do You Get Shorter Vacancies?
In the competitive world of real estate, every day a property sits vacant is a missed opportunity and a loss we have to swallow. That might be thousands in expenses and opportunity costs. Landlords and property managers grapple with the balance between finding the right tenant and minimising the downtime between rentals.
But if you’re a solo landlord rushing to replace your tenants one after the other, you might overlook some things and have no time to do a complete, thorough tenant screening. So, what’s the secret sauce to reducing these costly voids, and make sure the tenants you find are safe for your property?
Calculating Your Vacancy Rate
A rental property’s vacancy rate is the time it’s empty, with no one renting it. Usually, we calculate these every year and show them as a part of a whole (a percentage). There are three types of vacancy rates to check how well your property is doing.
- Physical vacancy rate: This is how long a rental is empty in a year.
- Economic vacancy rate: This is the rent money you didn’t get because the place was empty compared to all the rent you could have gotten. This number is handy because it tells you about lost money, not just lost time.
- Market vacancy rate: This average rate is based on similar properties, and it helps you see if your property is doing better or worse than others.
Here’s how to work out the physical vacancy rate: You look at the total days your property was empty, divide this by the total days in the year, and then multiply by 100.
For example: (21 days empty / 365 total days) x 100 = 5.8% vacancy rate.
For the economic vacancy rate, you need to know how much rent you lose each day. Say your rent is $1,000 a month, and the month has 30 days. This means you lose about $33 every day it’s empty. If your place was empty for 21 days, that’s around $700 lost. To find out the yearly economic vacancy rate, you take the $700 lost, divide it by the total yearly rent you could have gotten (for instance, $12,000), and you get a percentage (like 5.8% in this case). That’s your economic vacancy rate.
You can use these numbers as a benchmark to check the performance of your property and the effects of downtime between tenants.
Strategic Marketing
Listing a property is no longer a ‘post-and-pray’ game. Make full use of various platforms – online listings, social media, real estate platforms, and local community boards. The more eyeballs on your listing, the better. A detailed description and great photos can make your property stand out in the crowded marketplace. We understand the importance of advertising your property.
Proactive Management
Touch base with your current tenants early, around two months before their lease is up, to feel out their plans. Are they staying or going? Show them they’re valued, no matter their decision; it keeps things amicable during the changeover, which could work in your favour.
Begin advertising your space around 45 to 60 days before it empties. Most management firms skip this step as it’s extra work, but it’s a trick you shouldn’t miss. The sooner you start, the less time your property sits empty.
Make sure you ask for your current tenant’s permission to show the unit to prospective tenants. No chance for live tours or unit viewings? A killer online video tour of your property is your best bet.
Kick-off your search early, and you’ll see those vacancy periods shrink significantly.
Streamline the Process
From the moment potential tenants contact you, every interaction matters. Streamline the viewing and application process to be as efficient and straightforward as possible. Implementing digital forms, online scheduling for viewings, and prompt communication can make a world of difference. In a world where convenience is king, be the landlord that’s easiest to do business with.
In the end, the secret to shorter vacancies lies in a blend of strategies, all pivoting on understanding market needs and enhancing tenant experience from the get-go. It’s about being proactive, resonant with market demands, and above all, responsive to prospects.
SPEEDHOME helps landlords and renters with innovative lease guarantee, security deposit, and rent coverage insurance products. Click to learn how SPEEDHOME’s offerings and services can help you qualify more renters, safely and reduce your vacancy rate when you choose one of our packages.
