Solving the Infamous Problem: Filling a Vacancy
You own a rental property or maybe a few. You’re managing just fine as a landlord and are not ready or do not need a property manager. Your tenant just notified you they plan on moving out and it’s time to plan out filling the vacancy.
If you haven’t done this before, it can become quite the time consuming headache. Once the move-out is done, you have to evaluate the unit, identify, schedule, and complete any repairs or renovations, research the market to see what the rent should be, did any of the repairs you did raise the rental value? Put up a sign, post online (which can be expensive), respond to the countless calls, emails, texts, (the phone call about random people just walking around looking in the windows). The headache of answering questions that were very clearly listed in the description (NO PETS gets “I have a lizard is that ok?”). Then you have the showings, scheduling, meeting them there, the no shows (over half that schedule), the same questions over and over, taking applications (is your head spinning yet?). Then, when you FINALLY have an application that is acceptable, they change their mind, or you now have to coordinate lease start date, writing the lease, meeting to sign, collecting the deposits, giving the keys, doing a walk-through… those were some very long run-on sentences.
If you’ve never done it before it can be daunting. Even if you have, you’ve probably lost track of how many times you haven’t felt like doing it or even how many times you’ve asked yourself why you’re doing it. After a tenant moves out is quite easily the most stressful, time consuming, dreadful part of owning rental property.
Did you know there is another option? Real Estate agents can list rentals just like a property that is for sale - it is called an exclusive lease agreement. Here are some pros and cons, including a run-down of the difference between a property manager and a rental listing.
With a property manager, most everything is handled by them. The move-out process, evaluation, scheduling of repairs, listing/advertising, showings, applications, lease signing, etc. In fact, if you have a property manager and you’re having to do more than potentially switch utilities (some cities do not allow managers to do this, it must be the owner) and approving applications...it may be time to start looking into new options. Listing a property for rent is included in the services and just another day at the office for them (or should be). They will often have their own lease, paperwork, screening and deposit collection process. Vacancy filling should be a breeze for you as the owner with a property manager.
You may be thinking “I don’t need all of that.” You may live near the property, do your own maintenance, have your own staff. You may just simply not want or need a manager and you don’t want to call them about renting it out and listen to all the pitches about all the other things they could do for you. You may just be sitting there thinking “I really don’t want to deal with this.” This is where an exclusive lease will come in.
An agent doesn’t have to be a manager to list rentals, however you will need to keep in mind many agents will not do rentals due to time and lack of knowledge. Optimally, you will want to interview agents to find out their knowledge of rental markets. Best case, you find an agent who is also a manager and is willing to do an exclusive lease without pressuring for additional services.
There are a few differences between the service you get with a property manager and an exclusive lease. An exclusive lease is an agreement to list your unit for rent. This will include listing on the MLS, various apps/websites, conducting showings and hopefully collecting applications (it is incredibly helpful if they have their own rental application process). The application will be sent to you and once an application is approved the contract is ‘fulfilled.'
What does this mean? Most importantly, you will need your own lease and documents. With an accepted application there are 2 options (which will depend on what the agent is willing or able to do - this is an important question to ask during the interview, especially if you do not live in the area).
- The agent will notify the applicant that they were accepted. At which point they will provide contact information to you and the applicant respectively and you take over 100% from there - the agent's job is done.
- They will notify the applicant and coordinate with you to send them a pre-filled lease. If they are a manager, they will be unable to use any of their lease documents. They will also not be able to add, edit or change what you send them in anyway. From there they will schedule a time to meet the tenant, sign the lease, collect a deposit and give the keys. At his point, their job is done.
Additionally, they will not be able to negotiate and because of this will more than likely be contacting you much more often for clarifications - as they do not represent the property as a manager 100% of every question and decision will still need to be made by you. For example, negotiating lease start date, lease term, housing vouchers, rent amount, pets, roommates or co-signers. Much of this can be covered and your position discussed before the unit is listed, but there are going to be questions. Unless they have predetermined explicit instructions, they will call you, even if it’s ‘grey’.
Exclusive Lease’s can be a great option for the “in-between” property owner, a owner who is not so overwhelmed or in a position that requires a manager yet not willing to endure the incredible time and stress that comes with filling a unit. Afterall, going out to dinner with friends or family sounds much more appealing than sitting at your unit for 20 minutes waiting for someone who won’t show up. If this sounds like you, this is a great option to explore and a very clean, effective way to solve your problem.
Disclaimer: This article was written and is the opinion of a licensed Realtor in the State of Ohio. The agent does not, and cannot directly speak to areas, regulations, or legal procedures outside of their licensed scope. It is highly recommended you speak with an agent specifically in the area of your investment property and/or a lawyer in considered prior to any contract of legal signing or action.