LOW OCCUPANCY RATE FOR YOUR RENTAL PROPERTY?

A common problem among landlords is the fact that at any time, their rental property can become vacant. A vacant unit will not yield any income. After all, if you rely solely on the rental payment as your sole source of income, this becomes even more problematic for you. It’s important to understand that there can be several reasons why a rental property isn’t attracting any occupants, here’s some tips in order to come up with viable solutions to counteract them. These are the most common factors that contribute to low occupancy for rental properties.

#1. RENT IS TOO EXPENSIVE

Overpriced rate can be a knee-jerk reaction for tenants to cross you out immediately from their apartment or house-hunting list. Most landlords learn the hard way after realizing that tenants are avoiding their property due to overpriced rates. Obviously, a good solution to this is adjusting the price that you’re asking for to make it more appealing to your prospective tenants. But the question is, how low can you go?

Rent rate can be determined by comps and Day on Market (DOM), but knowing the area from a boots on the ground approach of the demand and rates tenants will pay is the best way to be most accurate with the rental rate that will attract qualified tenants.

The problem with underpricing the rent is that you lose much more profit than you actually realize. Underpriced units can create a very low cash flow and cancel out the benefits that you should be receiving for your property. True, you solved the problem of vacancy but ended up not gaining a sustainable amount of profit. Worst case, you actually lose some of your own money if you have to take it out of your own pocket to catch up on bills for your rental property. Analyze your competitors in the area and calculate properly to get an idea of the rate that you can consider as your “last price, take it or leave it” bargaining chip.

A comprehensive pricing analysis can help prevent unnecessary discounting. If your rental property basically shares the same price as the competition in your neighborhood, you will most probably be in the same price range as them. A holistic insight on these comps allow you to determine whether you should dial it down a bit or price it more aggressively. Having boots on the grounds that know the area and demands can help your pricing decisions might be the easiest lever to pull but you should always remember to ultimately make more informed and effective solutions that will not hurt you in the long run.

#2. LOCATION OF THE PROPERTY

Tenants want to look for a place to stay where it’s generally a safe and secure neighborhoods and homeowners that live in the area and show a pride of ownership by maintaining the exterior of the property which is visible to all .

Schools, shopping centres, public transportation lines, commercial districts; these amenities basically balance out the negative aspect of your neighborhood. This makes your property a lot more lucrative and highly demanded for rent. Each local amenity attracts a certain demographic. For example, the closer your property is to a school your chances of housing families with kids goes higher and tenants that will stay longer.

Lastly, a key strategy is to time the end of the lease to be between March and June, because that is the high season that people buy and rent, due to the great weather and work around the new school year starting.

#3. ADVERTISING

Sticking a “For Rent” sign simply wouldn’t be enough for advertising your property. Although newspaper ads add a little bit of leg room to wiggle you out of your advertising dilemma it’s basically irrelevant in this time and age. Online resources such as The MLS and rental sites that integrate with many other websites.

List the things that tenants are looking for. Be specific when it comes to the number of bedrooms and bathrooms, monthly rent, contact information, and location amenities. It would also be helpful to add your pet policy on the property agreement.

The attention span of people have been getting shorter and shorter with each passing year. This makes some of us more attracted to viewing photos rather than reading a full paragraph of a description of your property. Clear out any personal belonging, any extra furniture, and make sure that the room or area that you took a picture of is in a well lit area and from different angles.

Lastly, a key strategy is to time the end of the lease to be between March and June, because that is the high season for people to buy or rent due to great weather and school.

#4. THE PROPERTY DOESN’T FEEL “HOMEY”

Your tenants want to envision themselves living in the property you’re renting. An unkempt lawn, lack of basic utilities, or even a bad taste in the color scheme’s interior wards off your tenants from staying in your property. First impressions matter when listing the availability of your rental property.

Spruce things up and keep up appearances by starting with your curb appeal. Cleaning out the gutters or pruning and mowing the lawn is a good way to start. A fresh coat of paint inside AND outside allows tenants to have a good feel.

#5. STRATEGY TO KEEP TENANTS

Keeping the same tenant in a home is more cost effective than doing tenant turnover repairs.

Calling and meeting with the tenant 90 days prior to lease expiration to attempt to sign a 24 month lease is a great strategy. Also, gifts are kind gestures during the holidays that create a strong relationship between tenant and owner/property manager.

#6. GOING AT IT ALONE

Most fresh investors take being a landlord for granted thinking that it’s all about collecting rent and gaining a profit out of the property. A landlord’s obligations cover more than that. First time landlords especially find it hard to bounce back after dealing with a vacancy.

Sure, it does sound overwhelming and you may think that it’s more than you bargained for. That’s what property management services are for. Proway Property Management is your Detroit and Southeast Michigan property management company that takes the weight off your shoulders. Our team of well trained experts and professionals can cover a wide array of property management services from property valuation to tenant placement. To learn more, contact us through (734) 744-5080 or email us at [email protected]