Vacancy rates are a critical metric for landlords, property managers, and real estate investors. Vacancy loss lowers your NOI and a high vacancy rate over time can contribute to the devaluation of a property. Additionally, a high vacancy rate may indicate that something is wrong with your rental property or its management. Fortunately, there are a number of effective ways to reduce vacancy rates and qualify more eligible renters for your properties, keeping your units full and their value high.
1. Know what your renters are looking for.
Reducing vacancy rates begins with attracting the right residents for your property. In this regard, it can really help to know what high-quality renters are looking for:
Incentives and amenities
To entice high-quality renters, you’ll want to offer at least a few attractive incentives. Here are some of the most popular:
Community amenities such as gym, spa, pool, and coworking spaces
Technology-enabled apartments and homes (think smart security, smart lights, smart thermostat, etc.)
High-speed internet
Seamless communication (there are property management tech tools like white-labeled resident apps that can help with this)
Consistent and high quality maintenance
Dependable maintenance is a must-have when it comes to reducing vacancy rates in the long-term. Regular and effective maintenance can prevent small problems from becoming major issues, which can be costly and inconvenient for renters. This can also help to create a safe and comfortable living environment, in addition to fostering a better relationship with the landlord or property manager. Improving maintenance starts with:
Simple maintenance requests: Requests can be sent through an app, a texting service, a front desk call, or an email form on your website - as long as it’s simple and fast for your residents.
Quick response to maintenance requests: Choose reliable maintenance vendors who will provide accurate quotes and schedule quickly.
Prompt follow-ups on completed maintenance: A quick call, email, text, or app message after a vendor completes a repair for a resident will let you know whether the resident was satisfied with the speed and quality of the repair - and help you discover early if there is a problem with a vendor’s level of service.
Variety of lease options
Depending on your area and your target renter, they may prefer a variety of different lease options. It’s worth considering your offerings in terms of:
Length of lease: Longer leases – or at least the option for longer leases – provide a greater sense of stability and security for renters in high-demand (or high-cost) areas, and may be desirable for that reason. Conversely, renters in areas like tourist towns or college towns that see a high degree of seasonality may be attracted by a shorter or month-to-month lease term, even if the corresponding monthly rent is slightly higher than it would be for a longer lease.
Security deposit options: Security deposit replacements are an increasingly popular option for renters who don’t want to tie up a large chunk of cash in a security deposit. Companies like TheGuarantors offer security deposit coverage, which allows the renter to purchase a deposit coverage insurance product that costs a small fraction of a traditional security deposit, but covers the landlord up to the full security deposit amount if the renter damages the property.
2. Set competitive rental prices.
Too-high rental prices may “price out” qualified renters in your area, making it harder to fill vacancies. Let’s take a look at a few can’t-miss steps for setting rental prices:
Review market comps
One of the most effective ways to determine the appropriate rental price is to review market comps in the area. Market comps, or comparable properties, are other rental properties in the same area that are similar in size, location, and amenities. By reviewing the rental prices of these properties, you can get a better sense of the market rate for your rental property.
Analyze future risk
Analyzing the risk associated with your properties can help you set an appropriate rental price that considers the potential liabilities associated with each property. For example, properties located in areas prone to natural disasters may have a higher risk of damage or loss. This can impact the cost of insurance, as well as the potential costs of repairs or replacement.
Follow the law
Some states and municipalities have laws that regulate the amount and frequency of rent increases, security deposit amounts, and other rental fees. Be sure you are familiar with and abide by any rent control laws and landlord-tenant laws in your state (or the states in which your properties are located).
3. Reduce your resident turnover.
One of the most efficient methods to reduce your properties’ vacancy rates is to lower your turnover. Finding new renters and preparing a property for move-in costs significantly more time and effort than ensuring that existing residents want to stay in your properties as long as possible. Reducing turnover rates creates an overall more stable rental property - and a better living experience for your residents - and it starts with making it easy for your renters to want to stay:
Excel at the essentials
Renters are more likely to stay in a rental property if they are happy with their living experience. This means providing a clean, safe, and well-maintained property with responsive customer service. Addressing maintenance issues quickly, keeping your properties updated and clean, and communicating clearly with renters may seem like basics, but they’re the most important first step to retraining long term renters who value a positive living experience.
Be proactive with lease renewals
Whether you communicate personally with residents or use a resident app or email communication system to remind them about lease renewals, it’s best to start the process early, and communicate clearly and often about lease renewal options. This gives you, as the owner or property manager, plenty of time to fill potential vacancies if your resident communicates an intent to move. Some properties offer lease renewal incentives or encourage residents to take advantage of “early bird” renewal specials, which can allow you to lock in more recurring leases sooner, and give you a clearer financial forecast for the next lease term.
Build resident community and establish good relationships
Creating and sustaining a community that your residents enjoy and feel connected to can have a profound impact on your property’s success. Community events, perks, and fun days can be small and simple and still have a profound effect on your resident retention rate. Feeling connected to the community they live in increases resident satisfaction and reduces the likelihood of turnover.
4. Market your units.
Marketing your unit well is essential for attracting potential renters and filling vacancies quickly. Good marketing comes down to three essentials:
Get great photos of your properties and units
Great property photos are an investment you will use for years on your website, your social channels, and all of your listings.
Hire a professional photographer: Photos are arguably the most crucial element of your rental listing, and it’s worth spending a little extra to have this done well.
What kind of property photos to take: Get photos of the grounds, the common areas, and the individual units. If you offer furnished and unfurnished units, take photos of both. If you run a luxury property, take the time to go the extra mile and have some “lifestyle photos” taken of residents enjoying property amenities or unit amenities.
Property photography tips: Take photos during the daytime to maximize natural light, and make sure to show each room from multiple angles. Focus on the “feeling” of living at the property: What are your “showpiece” areas? Are there large windows with nice views? A cozy fireplace in the lobby? Do the units have walk-in closets or large master baths?
Write good marketing copy for your listings
Convincing marketing copy makes renters want to apply for your listing, and gives an accurate picture of the best parts of living at your property. When creating the copy for your rental listing:
Highlight features and amenities: List unit features and property amenities separately, to avoid confusion. Make sure you give the answers to common questions, such as the number of bedrooms and bathrooms, included appliances and utilities, parking options, and any unique features.
Focus on feeling: What does it feel like to live at the property? Use descriptive language to highlight the ways residents will feel: “Relax, in an oversized master bedroom with a walk-in closet the size of most home offices.” or “Nestle into this perfectly cozy space that’s within walking distance of downtown but feels miles away.”
Provide a simple way to apply or contact you: People are busy, and having a faster and easier application process than your competitors will give you an edge in qualifying more eligible renters for your properties, more quickly.
Maximize your word-of-mouth advertising
No form of marketing is more convincing than word-of-mouth, and there are a number of great ways to generate word-of-mouth “buzz” for your properties:
Collect “resident reviews” and quotes: Ask your residents, by email, through one of your social media channels, or in person at a resident event: What do they like about living at your property? What made them choose your property to lease? Ask for permission to display these quotes on your website, social channels, and listings.
Offer a referral program: Encourage your current residents to refer their friends and family to your property by creating a referral program - which could include a discount on rent or other incentives for both the referring renter and the new renter.
5. Screen your renters thoroughly.
One of the most effective ways to reduce vacancy rates is to find and retain high-quality residents. By improving your renter screening process, you can qualify more residents, safely and quickly. To vet renters thoroughly, start by creating a clear resident screening process that allows you to identify potential red flags in applications and avoid renting to individuals who may cause problems in the future.
Your renter screening process can also be automated and optimized with high quality screening tools, such as those provided by Apartments.com or Avail - or by using a lease guarantee service, such as TheGuarantors, which helps to qualify more eligible renters for your property while mitigating your risk of rent defaults, vacancies, lease breaks, holdovers, damages, and more.
Reducing your property vacancy rates
By knowing what your renters are looking for, setting competitive rental prices, marketing your units effectively, and taking steps to reduce your existing resident turnover and screen new residents thoroughly, you can reduce the vacancy rates of your properties and improve their long-term stability and profitability.
TheGuarantors helps owners, operators, and renters with innovative lease guarantee, security deposit, and rent coverage insurance products. Click to learn how TheGuarantors’ suite of products can help you qualify more renters, safely.