Show your rental property while tenant occupied?
Investor · Baltimore, MD · Member since 2015 · 20 posts · 13 votes
Would love to hear your experience and advice on showing a rental property while current tenants are still occupying it? During any visit that I have had over the past year, the place has been fairly clean. It is a small property that requires some imagination regarding furniture placement, etc. The current tenants have not done a great job of this. Although it is clean, they also have cats which I am worried could be a turn off. Try to rent right away and reduce vacancy costs or risk turning off potential renters because it's not 100% rent ready?
I believe vacancy is too much of an expense to wait on finding tenants after the current tenant's move out. Many prospective tenants also need to give 30 day notice at their current rental after they find a new place to rent. This can push your vacancy cost to 9% and higher if you wait to list a property until your tenants move. We like to start advertising a unit shortly after we receive notice to vacate and determine a day and time that works for the current tenants each week and limit our showings to one day a week during their desired time. We do this so that we are not disturbing our current tenants with multiple showings at random times. We space showings 15 minutes apart so that we can be with them during the entire showing. When a property is vacant I like to let them walk through on their own but when a current tenant has personal items I make sure I am with the prospects as they walk through to protect the tenant's belongings. Sure, there are going to be messy tenants and tenants that might say inappropriate things about the property and it might take a few extra showings but it is worth it in my opinion to get that new lease started right away.
I worked for an owner who was fine with waiting until a unit was vacated, then he'd paint, etc., then we'd advertise it for rent.
In my enthusiasm as a new manager, I tried showing units while they were still occupied, thinking I'd make more money for the landlord.
The problem is, that new applicants can't see beyond the current tenants' furniture, junk, mess, dirt, etc. Every single time I showed an occupied unit, the applicant couldn't wait to get away and I didn't end up renting to them.
But, if they can see a clean, empty place, that they can envision their stuff in, and can imagine a landlord keeping well-maintained because it's really clean, etc., renting that unit is a breeze.
So, my vote for you, is to get it empty, clean it, paint it, etc., then advertise it for rent. Really, anyone who would accept a rental based on viewing one that is occupied, is probably a risk, because they're desperate. Good, picky tenants, in my experience, need to see an empty, clean unit to commit.
I have never had any luck showing an occupied unit. There are so many issues. Having to coordinate an applicant who may or may not show up to the showing with a tenant who has to probably clean the place and prep for your showing is just a nightmare. I can't tell you how many times I went back and forth with a tenant about a good time for me to show, only to have the potential tenant no-show on the appointment, then all that time is wasted, the current tenant is annoyed, I'm annoyed, no one is happy.
There are potential issues with allowing strangers to walk around an occupied property. What if something is stolen? If you want to avoid that you have to be able to babysit the potential renter the ENTIRE time they are viewing the property. I don't like to babysit, I want people to be able to explore on their own.
Then there are always the potential issues of a dirty place, having your current tenant say something stupid to the potential tenant or vice versa, ugly furnishings that turn off potential renters because they just can't see past it, etc.
I know many landlords want no downtime whatsoever, and that's great for some people but I just can't see how it would work for me. I'm not that desperate for the money and I need time to turn a place over. I WANT time to turn a place over. I don't want the stress of worrying whether the current tenant is out the day they say they will be because I've got someone else moving in the very next day or week. I've just found that I would much rather have a place empty, repaired, cleaned, upgraded and ready to go before showing it. Do I lose rent? Yes. Am I a happier landlord anyway? Absolutely yes.
I would only show with a tenant in place if they have it in very nice condition. I did this with a tenant that was nasty and it was not a good idea. It would have been waaay better had I waited, which I ended up doing anyway, but I lost that first rush of applicants because of it.
Hi Jamie,
I usually show occupied units. In my market, leases are signed ahead of time, sometimes as much as 9 months before the start of the lease, so it is a common practice. Most of my tenants have reasonably clean apartments, and I always stress that the apartment will be clean, empty, and in good repair when they move in. If the current tenants are around while we are there, they back me up. Most people are able to look beyond the current decor, and I feel like it can give them an idea of how things would fit in the apartment as well- almost like free staging...
In a few cases, I haven't been able to show the apartment while occupied, but these are apartments that need a lot of work before they are ready for a new tenant and I do typically show apartments while we are working on them. This has happened a few times when we have purchased a property with tenants in place- one had 7 people living in a 2 bedroom apartment that needed a lot of work and the tenants weren't very happy about not being offered a lease renewal, and another that had a mean little dog who messed in the apartment and the occupant was not cooperative.
We take videos of all units prior to move-in. We then use these to market the properties 11+ months later. It drastically cuts down on the window shopping and no-shows.
We also bracket showings so we get all prospects in at one time when the current tenant has notice to make it presentable. Often we can rent the place with one showing window.
This has worked pretty well.
@Jamie Mathieu, I would only show occupied properties in very rare cases where the current tenant maintained a showroom appearance home and did NOT have any pets.
I generally just wait until the current tenant moves out, assess the unit and make the necessary touch-ups, then start the application process. I assume I will incur a vacant month with each turnover and I just chalk it up to CDB.
I am meeting today to collect a reservation fee from a new tenant on an occupied rental.
When the current tenants submitted their notice, I requested Sundays 2-4pm to show the house. I had my first showing this past Sunday and 5 showings scheduled, one no showed, and the other four were extremely interested. All four took apps, one came back highly qualified with high income with a move-in date of May 13. Just a 12 day vacancy and plenty of time to clean and make ready.
If you plan to show the property during tenancy, I suggest you put that language in the lease so that you can count on it. Also know that it makes sense for better properties, where you'll have good tenants. I wouldn't even consider for cheaper apartments, that would not be professional and would lower your tenant quality and price.
One good idea is to do a pre-inspection when you get the move out notice. That way you can also get an idea of the condition of the property and whether to even try to show it.
We are showing occupied units for the 2nd and 3rd time and it's been a total PITA. The first time was easy because the people hardly had any stuff and it was nice, trendy stuff, and they left the house for showings, people thought we had actually staged the unit.
With our other 2 listed units, we have older tenants, with older furniture... and it's been much harder. Our current tenants are very nice but they don't leave for showings which makes it a little awkward. And the coordination is harder as well. For empty units I just announce a rental open house twice a week and people show up. For occupied units I only allow one family through at a time so I can make sure they are within my sight so no one can claim anything was stolen, so I need to prescreen, set appointments, confirm appointments, so much more work than just a rental open house. One unit I have had listed since the beginning of March I have price dropped twice to $20/month lower than what the current tenants are paying since we still come out ahead having it rent for less as opposed to letting it sit vacant for a whole month or two.
I believe vacancy is too much of an expense to wait on finding tenants after the current tenant's move out. Many prospective tenants also need to give 30 day notice at their current rental after they find a new place to rent. This can push your vacancy cost to 9% and higher if you wait to list a property until your tenants move. We like to start advertising a unit shortly after we receive notice to vacate and determine a day and time that works for the current tenants each week and limit our showings to one day a week during their desired time. We do this so that we are not disturbing our current tenants with multiple showings at random times. We space showings 15 minutes apart so that we can be with them during the entire showing. When a property is vacant I like to let them walk through on their own but when a current tenant has personal items I make sure I am with the prospects as they walk through to protect the tenant's belongings. Sure, there are going to be messy tenants and tenants that might say inappropriate things about the property and it might take a few extra showings but it is worth it in my opinion to get that new lease started right away.
@Chris Herbert, that's exactly what we do, if a tenant decides not to renew at the end of their lease term. Typically our leases end July 31, and we'll do showings in mid-late May if they've decided not to renew.
We also do this for tenants who want to want to break their lease. Since we hold them responsible for rent until we find a new tenant, it is in their interest to clean up the apartment really well and cooperate with us. We have them take their pets with them on showing day. We just did this because a young tenant couple broke up and she moved away from the area. So a couple of weeks ago we had showings scheduled 15 minutes apart on a Sunday. We had four good sets of applicants from that single showing day, and rented to the first applicant who also happened to be the best. Turnover will be June 1, with no vacancy.