Filling the Vacancy is Not the Ultimate Goal
Don’t fall for the myth that having your property rented is the ultimate goal. Yes, it is important to fill a vacancy and fill it fast. I actually consider that a number one priority. However, let me say for the record that I do NOT want you to fill a vacancy at all costs.
Successful property management is not just about filling vacancies, it is more importantly about having good profit MARGINS. If you start dropping the rental price or offer specials which nullifies the annual profit margins of your net operating income, sooner or later you will fail. It makes no sense to lower your rent price or offer a free month of rent just to attract renters but when the year is over you have more expenses than you do income. Yet, that is exactly what some rental property owners do, because they foolishly fear having an empty place more so than a net operating income.
It’s painfully obvious to know when you have a vacancy that needs to be filled, however, I also challenge you to make sure you also know your NUMBERS and know exactly how much rent you need to have coming in to reach your profit margin goals. What’s that you say? You have not established your goal for how much net profit margin you have for your property. Then before you continuing spinning your wheels and offer all sorts of gimmicks to fill a vacancy with “anyone”, stop first and really identify your financial numbers and what is the minimum rental rate you need to make a worthwhile profit.
This is important to know because it may affect which niches of rental residents you target your marketing so as to reach your profit goals. Just going after and filling your vacancy with “anyone” at any cost may be slowing killing your real estate dreams, and what’s worse, you may not even realize it until it’s too late. And yes, I hear those of you who say you can’t determine your rental price based on what you need to make a profit. I understand the argument that rental price is determined by market rent. However, I respectfully disagree. A landlord CAN get more than market rent, if they learn how to market to various rental niches which are willing to pay more than market rent. And there are dozens of such rental niches out there.
Favorite Lease Clauses
Every couple of years, some of our top MrLandlord website contributors share their best, updated rental clauses that they now include in their lease. From a recent discussion on favorite and best lease clauses, here were some of the favorite lease clauses shared:
- Management does not allow late or partial payments. Sheriff eviction will be filed immediately if rent or fees are unpaid.
- Rent collection is done through direct deposit of rent to management’s bank account.
- Mold is a housekeeping issue. Tenant must immediately remove any interior mold when it first occurs.
- If management has to file for eviction $______ will be added as additional administrative/legal charges.
- No animal visiting or sitting on the property.
- Management is not responsible to provide alternative lodging, reimbursement, or discounts during repairs, failure of any utility, or Acts of God.
Welcome Prospective Renters With a Song
When showing prospective renters your rental, not only can you welcome them into your house with a song, but a song by one of their favorite singers. Connect with all the senses of prospects when marketing and showing rental your property. Tami Siewruk, a featured instructor at our recent Convention, shared the following idea.
Utilize ALEXA (from Amazon) when showing a vacant rental. Tami explained it this way: As you are approaching the entrance to the house with the prospective renter, ask him or her, what is one of their favorite singers (individual or group). When the prospective renter answers, as you open the front door, say: “Alexa play songs by ________________.”
Alexa will then begin playing one of the songs by the prospect’s favorite singer. This will most likely and immediately help to create a very positive environment as you start to welcome the prospective renter into your home. This is such a simple but powerful idea to greatly increase the odds that the resident will find your house appealing.
Include WIFI In Your Rentals
Do you now or have you ever thought about offering WIFI to your residents? This is something that is becoming more and more expected by residents who rent both single family homes and especially multi-units. You may want to consider offering it as part of your “standard or “customized” rental home package.
Ask the Same Question a Second Time
There was a great negotiation story shared on MrLandlord by a regular contributor and successful real estate investor.
“Got another flip house under contract this evening. That is five for this year so far. The sellers texted me the other day and asked me if I was interested in buying a property (Handyman ad). I said yes and got the details about where it was. My flip partner did a drive-by and actually looked at the wrong house, which also needs work, so we will pursue that one as well.
It took a couple days for the sellers to be able to have the time to show us and we finally made it over there yesterday at 12:30. Before we went, I asked them what they wanted for the house and they said $120,000. So I called my partner to see if he looked at the right house and ended up looking at the wrong house. So we were hesitant on going to even look at this property.
When we were on site yesterday, I played stupid and asked the seller again what he was asking for the house. He said $100,000. That’s was a $20,000 drop. And it came about simply because I asked him two different times what he wanted, and got two different answers.”
The tips in this column are shared by regular contributors to the popular MrLandlord.com Q&A forum, by real estate authors and by Jeffrey Taylor, [email protected]. To receive a free sample of Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at LandlordingAdvice.com, where you can ask landlording questions and seek advice of other rental owners 24 hours a day.