Why I've Had No Vacancies in Over Ten Years

When calculating returns and “crunching the numbers” for potential investment properties, conventional wisdom suggests that one figures in a loss of income due to vacancy. This figure is typically in the range of 7-10%, but differs depending on the local economy. It is wise to be prepared for unexpected repairs and vacancies, but wouldn’t it be nice to have no vacancies? Wouldn’t it be nice to turn an expected loss of income into profit?

Obtaining fully occupied rentals starts with having a good product in an area that is desirable. Potential tenants want a clean, updated home in a safe location that is priced in line with current market rates.

My investment properties are all located in Nashville, TN. It is where I live, and it is the market that I know. Nashville has had steady population growth that is projected to continue for years to come. That is the number one factor that creates a pool of potential tenants to choose from. I wouldn’t invest in an area that isn’t growing.

My experience as a landlord has been very positive, and I believe that is a direct result of selecting ideal tenants. Whenever I post a Craigslist ad with several photos and a detailed description of the property I have available for rent, I quickly get numerous inquiries that lead to applications. I do background checks and verify the income of the applicants. I always check with previous landlords to see if there were any late payments or damages to their property. The next step is meeting the tenants at the property to sign the lease and conducting a property condition walkthrough. Acquiring quality, responsible tenants is an achievement in itself, but isn’t the end game. Keeping quality tenants is what’s important.

All interactions with tenants need to be done in a prompt, polite, and professional manner. Many investors hire a property manager or management company to handle all tenant involvements, while some self-manage their own properties. Wise investors will check in with their tenants to make sure that the property manager is treating them fairly. I manage my rental properties myself and save the typical management fee of 8-10% of gross rents. Understandably, some investors may not have the time or desire to self-manage their properties, but tenants are paying the rent, not the management company. Tenants want to feel that they are valued as individuals and not just nameless “renters”. Repair requests and maintenance issues need to be respectfully addressed as quickly as possible. This is the duty and responsibility of management.

By managing my own properties and limiting vacancies, I save between 15-20% of gross rents. When computed annually for five properties that have an average rent of $1000 per month, it ends up being a savings of $9,000-$12,000 a year. Double that number if figuring for ten properties, and it becomes clear that these savings equal a major boost in income and investment return rates.

How have I had no vacancies in my rental properties for over a combined ten years? There isn’t a one word answer, but it isn’t complicated, either. Tenants are customers, and they can take their business elsewhere. If I provide a quality product and professional service, they won’t want to. By keeping high standards for my properties, I set an attitude that the tenants pick up on. I want my tenants to call me when there is a plumbing leak, because I want to have it fixed before the problem gets worse. Every few months I send a small handwritten note to my tenants thanking them for paying their rent on time and in full every month. Each year I send a Christmas card and gift card to Kroger. And I never forget, buildings don’t pay the rent, people do.