First Property. Vacancies are stressful!

[Satya Nagarajan]

I bought a quad 3 months ago in a B/B- neighborhood for $120,000. We took over from a previous owner that was managing the property poorly and 3 out of the 4 tenants had moved out from the time we went into contract to the time we closed. We upgraded 2 of the units and advertised higher rents (from $500/mo to $600/mo). My manager is doing a great job of keeping the property in good repair, but it's been very stressful dealing with the vacancy of the 2 rent ready units. It's been almost 2 months and no applications yet. We are offering a special now with a free month if they sign a 13 month lease. The last unit isn't rent ready and needs some work. We'll start on that once these 2 are rented. I have my fingers crossed that I'll get two good tenants soon. Has anybody been in a similar situation? This is a new experience for me, and the first few months have been rather stressful.

[Michael Boyer]

That sounds like a decent profile for the property and an active market with low vacancy rates. 

It may just be a matter of time, like fishing where you have to wait for the right tenant to swim buy....

A couple of ideas to check not related to the property:

1. Agency: I am self manager (and no one has incentive like the owner to fill a unit) so as you might troubleshoot the old question of "agency"... a problem economist point to when others do our bidding. For example, I often fill my unit in a fourplex in days while the professionally managed ones across the street sit vacant for months. It is not to disparage any manager, they just simply have less incentive than me to fill it and also many more clients and rentals to manage. It is logistics, too, as I have one unit vacant and can put 100% of my time in it. They may have dozens to attend to. So I am glad to schedule a set of promising showings on Saturday. I get right back to prospects, etc. I can get a tenant application in hand, screened, show the unit, onboard the tenant and sign the lease before the others manager can even call back on Monday (prospects often tell me I am the first and sometimes only call back they get). But managers can and do work very well for many people and you might look into items like response times, showing techniques, and find out what the issues are, if any, and make sure the incentives in your contract are aligning your interests, etc.

2. Marketing: Be sure the advertising is getting out in multiple channels used by the target market and bulk of renters in your area. Try other angles, like signage if near a high traffic school, or perhaps a local weekly or other online sites used in your area. That promotion along with a good product, a fair price and a good location are the right mix to land a tenant. Again, make sure the manager is doing this well. Ask how the process is going and if he is grouping showings, doing open houses, and how and where the unit is being marketed, etc.

3. Check Hassle Factor: I would also look at your manager's process. See if anything from the first call, through scheduling a showing, the application process, the terms, etc may be dissuading tenants from applying. It could be anything from slow response time to onerous paperwork or lease terms (deposit) or the whole tenor of the showing that is an issue. Renters are getting both a property and a person managing it, and if the property is renewed and well located, I might check the latter for areas of improvement to land a good tenant.

Best of luck.