Dealing with Vacancies After a Rent Increase
In any business, the main goal is to ensure a steady stream of revenue while still providing quality service. But in the rental housing market, this is often an uphill battle given the cyclical nature of tenants. As an owner or landlord, you may find yourself in the unenviable position of having to increase the rent to make up for the shortfalls when tenants move out. Here are some tips and tricks for dealing with vacancies once you’ve taken the plunge and hiked the rent.
Analyze Your Market
Before taking action, it’s important to take an honest look at the local housing market with an eye toward several key metrics. Check rental rates for your area to get an idea of your competition for prospective tenants. Assess nearby developments to see how they compare both in terms of amenities and prices. Keep an eye on the job market as well, as better opportunities in other areas can prompt people to leave.
Generate Awareness
Location is key in the rental market, so letting people know exactly how to reach your property should be either the first or second step in your plan. If you’re overlooking a body of water, a park or some other local attraction, take advantage and work that angle. Get the word out through listings in newspapers and magazines and take advantage of online tools as well. You might also consider partnering with real estate agents who are scooping up tenants in the area.
Incentivize New Renters
One way to fill those vacancies more quickly is to incentivize potential tenants with one-time credits or other perks. These can take many forms, from waiving various fees at move in time, to providing appliance credits, or even paying for a few months worth of rent. Doing this sort of thing can give you a leg up on the competition, as prospective tenants are always looking for the best possible deal.
Make Improvements
When looking at the big picture, it doesn’t take the sharpest analyst to recognize that a more attractive property demands higher rent. Enhancing your property is essential for drawing in the right tenants, so make sure you’re doing all you can with the current architecture, such as making plumbing and cosmetic upgrades. This includes anything from fresh coats of paint to new window treatments and carpets.
Modify Your Pricing Strategy
You may also want to adjust your pricing strategy to maximize returns. If it’s within your budget, consider offering discounts for long-term contracts; this will ensure a steady stream of revenue, and will also allow you to skirt the possible pitfalls of having to face the rental market now and again.
Improve Communication and Service
No matter how attractive a property may be, nothing will draw people in like excellent service and communication. The rental application process should be as thorough and easy to understand as possible to keep prospective tenants from losing interest. Once accepted, keep your tenants informed about their rights, repair requests and other pertinent issues they need to know. Finally, they should also receive clear instructions for things like deposits and rent due dates.
Maximize Your Security Deposit
As you’ll recall from basic economics, the higher the demand, the greater the price. In the case of rents, that also means more money for your security deposit, so be sure to maximize returns by setting the rate apart from the competition. Some landlords also offer discounts for tenants who pay their rent on time, which can create a mutually beneficial scenario.
Know Your Tenants
When it comes to landlords and tenants, savvy real estate investors know a great deal about their clients. Have a tenant screening system in place, and when creating a tenant profile, focus on points like credit status, past rental history, and current employment. Taking these steps can help eliminate any potential problems from the very start.
Get Proper Insurance
Accidents happen, and the right insurance plan can help give you peace of mind when it comes to dealing with vacancies after a rent increase. Make sure you have proper coverage in case of natural disasters, tenant lawsuits, tenant property damage, and other common eventualities.
Maintain the Property
Once you have new tenants in place, it’s important to keep up with maintenance and repairs, both inside and outside the property. The last thing you want as a landlord is news of an accident or a legal setback because of a neglected issue. Keep the property in good shape, and your tenants will thank you for it.
Conclusion
Raising the rent can make a huge difference in your rental income, but filling vacancies can be an arduous process if you don’t know your market and how to capture the attention of potential tenants. Keep in mind the tips and tricks outlined above, and you’ll be well on your way to making the right moves when dealing with vacancies after a rent increase.
What are some ways to encourage tenants to stay after a rent increase?
1. Offer a rent concession or discount.
2. Provide an upgraded amenity or service.
3. Provide an additional two weeks of rent free at the start of the new tenancy.
4. Offer a long-term discount for tenants that renew their lease.
5. Negotiate a financial package to cover moving costs for tenants that choose to move.
6. Offer an extended lease agreement with a flat rate of rent for a pre-agreed period.
7. Create an annual tenant survey with rewards for participation.
8. Provide discounts through a loyalty program.
9. Offer an early payment discount.
10. Create incentives that reward tenants for referring their friends to the property.
What happens if a tenant can’t afford the rent increase?
If a tenant cannot afford the rent increase, then they may need to start sending out applications to other rental properties to see what other options are available in the area. The tenant may also be able to negotiate a payment arrangement or payment plan with their landlord to help make the increased rental payments more manageable. Additionally, the tenant may also be able to apply for financial assistance programs to help cover some or all of the rent cost.
