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Top 3 Ways to Minimize Rental Property Vacancy Rates

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As I’m sure you already know, long term rental property investing generally requires tenant management.  And even though no one really likes to be a landlord, in order to be a successful investor you must make finding and keeping good tenants a priority in order to minimize your vacancy rate.

Vacancy rate basically refers to the percentage of time that a rental unit is empty over the course of a year.  So if one of your units is vacant for 1 month out of the year, your vacancy rate is approximately 8.3% (1 month divided by 12 months).  If your monthly rental rate is $1,500, then your annual loss attributable to your vacancy rate would be $1,494 (calculated as ($1,500 x 12) x 0.083).  Thus, you can see the need to keep your vacancy rate at the lowest level possible. 

Of course this begs the question of what exactly can be done to keep vacancy rates to a minimum.  Well, there are a few reasons why you might have a higher-than-optimal vacancy rate.  These include rental rates that are too high, poor property condition & aesthetics, and a lack of communication / cooperation between the landlord and tenant.

Obviously your vacancy rate will take a hit if your rental rate is too high, because your tenants will try and move into a more affordable apartment as soon as feasible.  So the first step to reducing vacancy rates is to make sure your rental rate is fair and competitive with other similar units in the area.

The aesthetics and condition of the property will also influence your tenant’s desire to stay.  If the property looks like it is in complete disarray, or if it is metaphorically falling apart, tenants will not enjoy living there and will seek to move out when possible.  So make sure you do the little things necessary to maintain the property in good condition at all times.

Finally, vacancy rates will be higher than average if you do not respond to tenant requests, follow state landlord tenant laws, or otherwise treat them with respect.  One of your most basic landlord responsibilities is to maintain the property, and if your tenant informs you of a problem you ought to address it right away.  Otherwise, your tenant will get annoyed and will leave, not to mention the fact that small problems could turn into big problems if not addressed in a timely manner.

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