As a property investor, there’s nothing that kills your profitability faster than empty houses. As a property manager, it’s in your best interest to make sure that your clients — the investors — stay profitable. Which means it’s up to you to have a solid plan for keeping the rentals you’re in charge of full. There’s three parts to that plan, and here’s four tips for each of those three parts.
Download Your FREE copy of ‘How to Rent Your House!
Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.
Part 1: Keep Your Existing Tenants
Keeping your existing tenants is a fairly straightforward matter of making them happy to stay. The four steps to making your tenants happy are equally straightforward, but it’s easy to skip one or more of if you’re focused elsewhere:
- Be a professional communicator. Respond to complaints quickly — even if just to say, “I’ll get back to you soon.” Be firm but polite in enforcing the rules. And always share your expectations of how a tenant is supposed to handle situations before those situations arise.
- Be a regular communicator. Get in touch with your tenants the month after they move in, just to check in and answer any questions they may have. Send them a letter after their third month to the same effect. And send them a reminder — via email, voice or snail mail — each month to remind them to pay on time.
- Reward good behavior. Your tenants should know that you expect them to treat their role as tenants respectfully, but they should also know what the rewards of good behavior are. There are a lot of things that a PM can offer a tenant as rewards, from the rights to repaint to the installation of a small appliance to a professional cleaning.
- Stay on top of the property. The number one management-caused reason for a broken lease country-wide is a negative experience involving a maintenance request. Even if you can’t get to a request right away, tell the tenant the plan so they know what to expect.
Part 2: Market for New Tenants Effectively
From time to time, a tenant will leave even though you did everything right. When that happens, you have to have a proactive plan to replace them quickly and efficiently. Here’s four steps toward that goal:
- Activate marketing immediately upon receiving notice. The hour you know that a tenant is leaving, call your advertiser and activate all of your advertising for that house.
- Remind your tenant of how the laws in your state work. In most of them, you are allowed to show a house to a potential new tenant with only 24 or 48 hours of notice. Tell them to be ready because you’re going to be bringing people by. We recommend getting the existing tenant to agree to a weekly schedule when you can show the property. You still have to let them know in advance about a showing, but it makes it much more efficient for all involved.
- Enlist the tenant to help you out: It’s amazing how far a little incentive can go. Offer your tenant $10 to clean up a bit before you bring someone over for a showing and $100 if they give you a referral that lands a new tenant after they leave. If they don’t take you up on it, you haven’t lost anything — if they do, you win!
- Think outside the box. There are lots of people out there who have the job of helping others find a place to live. Corporate human resource managers, pastors, social workers and several others can be amazing resources for finding people who need homes. If your traditional advertising hasn’t worked by the time the house is ready for a tenant, get exotic!
Part 3: Prepare For the New Tenant Efficiently
You don’t get to start a new tenant just because the existing tenant has left — there’s a lot of preparation to be done between the two. In order to get that done effectively, try these tips:
- Schedule any repairs for the first empty day. Right when you start the advertising for the property, call the relevant contractor(s) and schedule them for as soon as they can get there after the tenant’s last day.
- Schedule cleaning for that same day. Cleaning never takes just a single day, and unless your contractor is tearing the whole house apart, there’s going to be places that the cleaning crew can get to that the contractor won’t be touching. Get everything cleaned that can be cleaned, and schedule the cleanup crew to be there the day after (or even later the same day) that the contractor will finish up.
- Review the appeal. Cleaning and repairs are one thing, but it’s also important that the rental is attractive to potential tenants. Check the curb appeal, the first impression as you come in the door, and walk through looking for aesthetic turn-offs. You often don’t have to do much to fix these things, but you can’t afford to ignore them either.
- Screen prospects thoroughly. Don’t ever skip this step — screening prospects is the first and most critical step to making sure that your next tenant sticks around for a long time and is as profitable as possible.
Following these steps consistently and efficiently every time will maximize the profitability of each rental you oversee, which will keep your clients happy — and you profitable!
How do YOU avoid vacancies in your rentals?
Leave your tips below!