In this new series, Want to Be a Landlord?, we’ve advised you what steps to take when considering a rental purchase and what to look for in a prospective property. This final article in the series deals with another vital aspect in the income property equation. Once you get your property rented, how do you maintain occupancy and avoid the cycle of temporary tenants and long-term vacancy?
One way to avoid paying for your rental when you have no tenant is to have a solid leasing/rental agreement. As we advised in an earlier article in the series, having a contract with no loopholes or ambiguities will protect you financially. If your tenant leaves the property prior to the end of their lease, a proper contract will make them financially responsible for the duration of their signed lease term. This may not get you a new renter immediately, however, you can recoup your outstanding rent while you search for another tenant.
In instances where the issue is not one of early termination of lease term, there are other things you can do and/or implement to try to maintain occupancy.
- Amenities, Amenities, Amenities. Having an attractive property makes the grass less green on the other side. Be judicious in how you spend to upgrade, but make your property as attractive as possible to prospective tenants and to keep them. They won’t need to upgrade if they are already living somewhere with all of the bells and whistles.
- Inclusions. If your property is energy efficient, it is a good idea to include some or all utilities. Property owners are moving away from this because of the potential for abuse. However, with the proper contract, holding the tenant responsible for expenses outside specified/average use, you can safeguard yourself from abuse.
- Ease of Access. Your tenants’ lives are just as busy as yours. One way to make your property an appealing place to live is by making yourself available or easily accessible. An email and 800# allows for a feeling of immediacy and 24 hour access. You might also consider providing a means to pay online. Being able to forgo checks, money orders, and stamps as well as a way to also avoid late payments is very attractive and not something everyone provides. More and more people are paying all of their bills, when possible, online. This also provides an air of professionalism.
- Research. I know we’re starting to sound like a broken record. We wouldn’t keep saying it if it wasn’t so darn on point! Knowing the comparables in your area is not just something you do during the property search. You also need to keep up with this information after your purchase of a rental. Know what other properties are requesting for rent, popular upgrades, concessions provided for multi-year leases. The list goes on and on. Familiarize yourself with the market, see where you exceed market demands (and you might even be able to get more rent), or see where you are lacking so that you may address areas of concern and stay competitive.
Being a landlord is so much more than owning multiple properties. It can be rewarding and very lucrative when done with proper planning and due diligence in all aspects of the process. Maintaining occupancy is arguably one of the most important tasks involved with owning an income property. After all, it’s not really an income property if it’s not generating income! Hmmm, something to think about.
