The busy season in leasing, move ins and move outs is nearly at our door step. Like most management companies and real estate investors, we have a majority of our lease expirations stacked in the spring to summer months. The reason for this is quite simple, in our region this is the season people think about moving. The reasons your resident might want to move can be one of many. Either they are wanting to purchase a home, consolidate households (people moving from a 1 bedroom to sharing a 2 bedroom apartment with someone else), deconsolidate households (think of three roommates wanting to get their own studio or one bedroom), poor living conditions or poor maintenance performance from their housing provider.
Most reasons your residents choose to move out are controllable. That's why it's best to have a comprehensive retention strategy in place to keep your residents longer. By the way, a move out costs a property owner on average $2500 per unit, between vacancy loss, make ready costs, and leasing fees!
For information on our retention strategy, visit our blog post here.
But some move outs are just unavoidable. The typical property owner will post their apartment home as available 30-60 days prior to the current residents move out date. And then perform their make ready of the unit after the current resident moves out. This type of make ready work can consist of cleaning, painting, and other minor repairs which can cost most property owners from as little as two weeks to one month of vacancy loss. If you multiply this over several units, the costs from vacancy loss alone can be staggering. For instance, if you apply this scenario to our portfolio of 102 units, assume we have a 50% turn over per year or 51 units, with an average market rent of $800 per month. If we incur 2 weeks to 1 month of vacancy loss, this can translate to a yearly vacancy and collection loss of $20k to $40k per year! That's essentially someone's salary! Having a vacancy management strategy in place is mission critical to the sustainability of your business! Here are some tactical stuff that we use to manage minimal vacancy loss as a management company:
In addition to helping reduce vacancy loss, these tactics will be helpful to having a more pleasant move in experience for your incoming tenant. Remember, if your new residents have a bad move in experience, they will hold it against you, and you can take the likelihood of them renewing their lease next year and kiss it good bye! We hope that these tips help you in making your rental business more profitable and your residents much happier!
This blog serves an an outlet for all of our invaluable team members to share their insight on development, property management, and all things affecting real estate in our community.