Suggestions for Dealing with Vacancies - Posted by Marie

Posted by Rich-CA on June 30, 2007 at 15:31:15:

It depends on where you are located. In some areas, like Phoenix, there are enough rentals listed through MLS to find out what locations and prices are actually getting tenants. Different locations are worth different amounts of money to a tenant.

You should also find out what kind of advertising gets the most foot traffic for the dollar and place an ad for the property there. I have used and for this as well as local newspapers and the MLS (through my property manager). The sign in the front yard brings in people driving through the neighborhood where they want to rent (these should have flyers they can take with them).

However, the main thing is price. If you are outside the price range where people are looking, you won’t get any calls no matter what you do, except perhaps by the “professional tenants”, who figure you might be desperate enough not to check too carefully before renting. If you are getting few to no calls, you’re still too expensive. Its better to be short $25 per month than to be vacant an extra month.

Suggestions for Dealing with Vacancies - Posted by Marie

Posted by Marie on June 30, 2007 at 10:21:02:

This is one topic rarely covered at REI seminars or courses, at least the ones I’ve heard. I did a search, but unfortunately everything comes up “404”'s.

Is anyone here a long term holding landlord, and how do you deal with vacancies? In our area, there is an overabundance of new and newer homes for rent. A property has to “stand out” in order to get attention. Other than good advertising, any suggestions? I’ve thought of offering a lease option to purchase. Is price all that matters here? One PM suggested I lower the price substantially, because there is so much available. Our home is 2002, 1289 sq. feet, 3/2, at $850 a month (reduced from $895 with our last tenants who left to purchase their own own out of state). Some larger homes are asking $895, sometimes $900. Should I reduce to $795?

Vacancy is the Scourge of the Biz - Posted by Jimmy

Posted by Jimmy on July 02, 2007 at 05:36:40:

I’ve been landlording for 8 years now. Vacancy is the most frustrating aspect of the biz. I love it when a broker or a seller hands me a proforma showing a 2% V factor. In my experience, a 15% collection factor is more accurate. In other words, at the end of any given year, I will have colected about 85% of the maximum possible rents. That includes vacant units, plus no-pays and slow-pays. a better metric, in my opinion.

with that said, I have had periods of time when I had virtually no vacancy. for about 6 months last year, I had 88/90 units full. but in the middle of 2005, I was down to 65/85. 9 tenants split all at once. it just happens.

and 2003 was a disastrous year for rentals in Tyler, TX. combination of horrors. 500 new apartment units hit market on north side of town (my side). new HUD vouchers disappeared. major layoffs at Trane AC and Kelly Sprngfield factories. worse yet, Tyler Pipe Foundry (an emplorer of thousands) was shut down by the EPA for the whole year. and I had a 4-plex right accross US-69 from that facility. and I lost a number of my best tenants to home ownership, due to historically low interest rates and he plethora of 107% loan deals back then. My V factor was 40%. Here’s the incredbly ironic thing about 2003 in Tyler, TX. The entire resale market jumped 20% in value. So I sold off a number of properties, pocketed some profits, licked my wounds, and moved ahead. So how did I manage to survive 12 months of 40% vacancy? For one, I am not mortgaged up to my eyeballs. and I keep a reserve of cash available for just such contingencies. but it was an unpleasant experience.

I learned some important lessons then. I knew I needed to be more diversified geographically. Now, I have clusters of properties in 6 different towns in ETX, and they do not experience the same things at the same time.

When I have a persistent vacancy, I have my managers pay close attention to the people they show the unit. I want feedback. SOmetimes, I meed to lower the rent. Sometimes, I need to take the unit off the market and spiff it up. Some properties just need to be sold, because the problems are not fixable. Sometimes I lower the deposit, or allow it to be paid in installments. Sometimes the problem is external. A drug house next door is infecting the neighborhood, chasing off all the good tenants and bringing in only bad ones. I stay on good terms with local law enforcement, and report these activities.

Re: Suggestions for Dealing with Vacancies - Posted by wpage

Posted by wpage on July 01, 2007 at 13:46:48:

Marie I have been a landlord for over 30 years and I have had many ups and downs with high vacancy. Right now, fortunately in my area there is vertually no vacancy. When you have a lot of vacancy in your area, you have to market as much as you can afford in any and all newspapers from the local to the larger papers. Post free ads on all the bulletin boards of grocery stores, pharmacies, hospitals, and any other place you can find. Get yourself some rental cards (business size) made up cheap, then go to staples and buy some magnet peel and stick, cut them into small strips and put them on the bak of the cards. You can put these on anything that is metal, including coke machines, but the best one I like, is you go through the parking lot at the mall and stick them on the driver side of the car door.
I am a big fan of rent to own for single family homes but only if you want to sell? The benefits to you are as follows: Usually you can get more rent per month and you can get a higher selling price without any agent commission. You can collect a non-refundable option deposit when you sign the lease and a separate option agreement. I try to get at least 3 to 4 months option monies. This protects you in case they don’t pay the rent. Keep all options open and don’t get desparate to the point that you pick a bad tenant. That will put you in a worse situation when you have to evict. good luck