One of the worst nightmares of any landlord is having unexplainably high vacancy rates. Sometimes it seems that everything is perfect – or at least as perfect as it can get – with your rental property, and you still cannot retain good tenants. If this is the case, don’t despair. Have a look at our tips on how to improve your occupancy rate for maximum return on your investment property.
1. Conduct Tenant Exit Interviews
If you experience a turnover and can’t figure out the reason on your own, go to the source. The first thing you should do in this case is to start having tenant exit interviews. Ask politely your leaving renters for a few minutes of his/her time and enquire about the exact reasons he/she is leaving your property. Assure them from the beginning that your motivation is not to keep them on your rental (if they’ve made it clear enough that they have no intention to stay any longer) but simply to understand their reasons to go. Consider offering an incentive such as deducting a percentage of the last month’s rent. This investment will be more than worth it if it allows you to fix the issues with your rental business and retain good tenants for longer.
Make sure that you have a ready list of questions from the beginning. Remember to be nice and polite and not make your renters feel as if they are being interrogated.
As soon as you are able to identify the cause of the high turnover and vacancy rate, start working on fixing it.
2. Revisit the Rental Agreement
In the meantime, you can also work on reviewing the landlord-tenant agreement to make sure there are no major issues with it. Maybe you were in a hurry to start renting out when you first drafted the rental contract and never had time to revisit it after. Try to enhance the tenants’ rights as much as possible, without hurting your own interests, of course. You may want to consider hiring a real estate attorney to help you draft a new rental agreement. You will spend a few hundred dollars, but a new, improved landlord-tenant contract might be the key to solving your high vacancy rate problem.
3. Consider Changing Your Pet Policies
If the issue with your rental property is that you cannot attract tenants to begin with – rather than that they leave too fast – you should think about adjusting your pet policy. Many landlords do not allow pets on their properties, and it is all for good reasons. Cleaning after pets or repairing damage to your property or furniture can cost you dearly and affect your return on investment negatively. However, you might be able to find renters with pets if you have no luck among those with no pets. Just make sure that you adjust your rental agreement template accordingly to cover all pet-related damages. Generally speaking, pet owners tend to make good tenants. Think about this this way: if they are responsible enough to take care of a pet, they will also take good care of your property.
4. Compare Your Rental Rate to the Average
Another reason why you can’t attract tenants might be that the rent you ask for is too high for the area and for your property type. Thus, conduct rental market analysis and get some rental comps – rental properties similar to yours, located in the same neighborhood. See how much others are charging for the same rentals as yours. If you figure out that your rate is above the market average, don’t hesitate to drop it down. The higher occupancy rate you will get will translate into more rental income immediately. This, on the other hand, means higher cash on cash return and cap rate – exactly what every real estate investor wants.
5. Do Repairs and Fixes on Your Rental
Have you visited your rental property recently? Have you looked into all its aspects carefully? Are you sure there are no outstanding problems with the plumbing or heating? If you seem to lose tenants too fast, you have to make sure that everything is fine with your property. You should be able to discover any ongoing issues during the tenant exit interviews. Once you have a list of the most pressing problems, act on them right away. Being a landlord is an active endeavor as you have to always make sure that your property is in a top shape and in a competitive condition.
6. Add More Amenities
Maybe you don’t have to lower your rent but to add more amenities to your rental property instead. Once again, the key to success with this strategy is to study what the rest of the landlords in your area are doing. Is everyone offering a parking spot for the same rental rate as yours? Then, you have to do the same. Has everyone repainted their property recently? If so, you know what to do. Your rental has to be competitive.
7. Look for a Different Tenant Pool
If you cannot get tenants to rent your property, the issue might be that you have been targeting the wrong tenant pool. For example, if your property is located in a college town, you might have been consciously or subconsciously trying to attract students when the right tenants for your rental are the professors or administrators. Try changing your advertising strategy to see if it might yield better results.
8. Improve Your Marketing Strategy
Last but not least, a high vacancy rate might mean that there is nothing wrong with your property, but that you are not able to market it properly. Even if you have the best rental in town, no one will want to rent it, unless they know about it. Diversify your marketing strategy. Advertise your house for rent on social media and in local newspapers as well as among friends, family, colleagues, and acquaintances. The more people who know about your rental, the higher your chances of finding the right tenant.
The way to make money with rental properties is to have a high occupancy rate at all times. This pushes your rental income, which in turn translates into high return on investment. After all, there is no way to make money as landlord unless you have tenants who pay monthly rent. While it is heartbreaking to have a high turnover and vacancy rate, it may be a simple issue to fix. With the 8 tips above you should be all set to push your occupancy rate and your rental income up.
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