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Property Management Blog

Published on Monday, November 25, 2013

Got Vacancies? The Top 4 Reasons Your Rentals Are Empty

1. The Rent is Too High

Too often landlords purchase rental properties based on the appeal of the deal, not on the overall appeal of the property to renters.  Investors looking for higher margins can crunch the numbers and pump up the rent. Unfortunately, renters may not play along.

Be realistic and match rent to the competition available at the time the unit comes on the market. Or better yet, come in just a little bit lower than the comps. That $50 difference, spread out over a year’s lease, may be better than another month with the property generating $0.

2. Your Vacancy Occurred at the Wrong Time of the Year

The rental market is generally cyclical.  Whether it’s a problem tenant who left mid-lease, delayed remodeling or repair projects, or closing on a rental property late in the year, you may be set to fill vacancies during the dormant period.

Look at what’s going on in the area. For instance, find out if you are missing the deadline for college students starting classes. Watch rental ads in the newspaper and watch for cycles.

If you’ve had to terminate a lease, offer a shorter lease to the next tenant, then renew or re-lease during a busier time of year.

3. The Property Has No Appeal

A poorly-maintained property will lead to unplanned vacancies. First, the lack of appeal will chase away applicants who feel they can do better. Those who are willing to settle are less are less stable tenants in the first place.

The law works against landlords in this situation, and tenants may be allowed to break the lease over habitability issues. Even if they stay, they may be entitled to rent abatement, further sapping your property’s profit potential.

4. Outdated Advertising

More and more, apartment seekers are using the Internet to find properties. If you are not riding the wave, you are losing out to other more tech-savvy landlords in your area. Many of the apartment listing services now offer incentives, including cash, to tenants who find rental homes.

The content of your ads must maximize the property’s appeal. The standard of the industry now is to provide photos or even video tours. If you rely on a ‘for rent’ sign — still a viable option — include a flyer box with pictures and ample information to get applicants excited about the property.

Periodic vacancies are inevitable as tenants move on.  Be ready for a quick turnaround by keeping a checklist of needed maintenance and repairs for each unit, and line up workers in advance of move-out dates.  Nurture good relationships with contractors and with tenants, and you will improve your bottom line.

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Landlord Knowledge Base

If you’ve ever considered investing in a few rental properties in Philadelphia or Bucks County, PA now might be a good time. Prices are still low in Philadelphia, but have been on the upswing. According to the National Association of Realtors, the median price of an existing home in a US metropolitan area grew 13.7% between July 2012 and July 2013, the latest in a 17-month streak of year-over-year price increases. 

New landlords can choose from properties that are likely to appreciate and a large pool of potential renters.Licensed realtor Pat Mueller cites a few reasons for this trend: “Many families have lost their homes to foreclosure and are entering the rentals market for the first time in years. Mortgages are also harder to get now, so fewer people are qualifying for a new one.”The more skills you bring to the table to get into Houses for Rent in Philadelphia Philadelphia or Bucks County, PA and the more time you have to devote to your properties, the faster you can make a return on your investment. 

But investing in rentals can also be disastrous (or too stressful to be worthwhile) without expertise. Here are three professionals you may consult about your new rental properties, and what you can do to mitigate how much they cost you:Handyman:  You may need to hire a specialist for some work on your rental. If you need new outlets or new pipes, for example, hire an electrician, plumber or licensed contractor. Handymen usually tackle smaller, more manageable tasks, like:

  • Painting and paint removal
  • Drywall repair
  • Minor appliance repairs (fixing a leaky toilet or faucet, among others)
  • Installing tiling or flooring, moldings, windows, doors
  • Refinishing decks, cabinets and other wood items

When You Could Skip It: You could do any (or all) of these projects yourself if you have the time and interest in learning. Of course, this only works if you live relatively close to your rentals and are flexible enough to service them on short notice. And if you’re willing to respond to the occasional 5 AM basement flooding.

Average Savings: Any base rates or costs-per-hour vary from location to location in Philadelphia or Bucks County, PA , but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a handyman employed by a company. Expect an additional charge if your job requires a trip to the store for materials.

Resident Property Manager As the owner of a handful of rental properties, you may be able to manage them yourself, but if you want help, a single resident manager would probably be more cost efficient than a property management company. Resident managers may:

  • Serve as a handyman
  • Advertise vacancies in your units
  • Show apartments to prospective tenants
  • Review rental applications
  • Collect rents

When You Could Skip It: Again, the closer you live to your properties and the more spare time you have, the less likely you are to need a manager. The obligations of being a boss will also cut into the time you save on maintenance.

Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community and adjust according to how much responsibility your manager will take on. 

Real Estate Agent: Once you’ve gotten your financials in order and done your own research on the neighborhood(s) you’re considering, you might contact a realtor to show you potential properties. You can also arrange for a realtor in Philadelphia or Bucks County, PA to show rentals once they’re ready to rent.

When You Could Skip It: It depends. Even if you’re a local, or have thoroughly researched the neighborhood(s) you’re considering, a realtor is a great resource for a first-time rental buyer. Realtors have access to data and statistics not necessarily available to the general public and first-time buyers may not know all the right questions to ask. Using a realtor to fill your Houses for Rent vacancies is less of a no-brainer, depending on your other time commitments or whether you plan to hire a resident manager who could do the same thing.

Average Savings: As a buyer of rental properties, as when buying your own home, sellers typically pay most, if not all, of the buyer’s realtor fees. In this case, Mueller points out there’s little reason not to work with a realtor. For help in filling your units in Philadelphia or Bucks County, PA, the services of a realtor would set you back between 10-20% of the unit’s rent per month.  Mueller recommends interviewing with several brokers before making your final decision to invest into Houses for Rent .

The Bottom Line: As a new landlord, you can’t necessarily control the flexibility of your schedule or the amount (and cost) of unexpected repairs to your properties. Rentals are a long-term investment. However, to maximize profits from your Houses for Rent, new rentals, you can buy close to home and start small. It is best to begin with just one or two properties. This will allow you to maximize the time you spend on your properties’ needs, and minimize the amount you’ll have to pay anyone else.

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