Each month you have a vacant unit sitting you lose about 8.3% of the potential yearly revenue from that unit, which means that every month it sets vacant it starts to add up quickly. As soon as you find out that you will be having a vacant unit you need to do a market survey to confirm the current market rate on your unit. Have your lead maintenance person who does your final walk through prepare the list of repairs/maintenance issues (if any), as they do the walk through. By doing so, they can order the needed material the day of, and can be prepared to start the turn of the unit as soon as it becomes vacant.
Once the unit is vacant, begin placing your ads. As soon as the crew has the unit ready for market, you can start showing the unit immediately. Make sure your market survey is current, allowing you to set the best price for your available units. Be aware of specials, if any, working the best in your area. If you need to fill several units, consider running an aggressive special to get your units filled. In the process though, be sure you don’t give money when there’s no need. Always offer your residents a referral for bringing someone. Most importantly, listen to the market. If you are not getting interest in the unit, you may need to lower the price.
Raise Rents Smartly
Know your market rents. Be aware of how your property compares to the market, and set your prices accordingly. I find sometimes it’s wise to offer an incentive when raising rent. Offer carpet cleaning or an accent wall, are some quick examples. It can make the increase issue much more palatable for your renter. This method can also help if you have seen a minor decrease in rents elsewhere.
If the resident believes they can get a better deal elsewhere, they may leave. Avoid the situation making their home nicer. They may decide to stay, and not deal with the pocket costs of moving expenses. Knowing how much moving costs could be would be good to know if it gets brought up. Make sure the system you are utilizing sets reminders for when rent increases are due, when leases come up for renewal, and be aware of maximum rental increases allowed, if you are in a rent control area.
Be Consistent With Late Fees
Keep in mind you are running a business. If you don’t collect the fees which are due, you are leaving money on the table. Keep in mind your residents will talk. If you decide one person can be allowed not to on time, or pay the late fee, you will most likely be hit up by more residents asking for the same.
Turnovers can be expensive. The cost of turning the unit and advertising can add up quickly. As mentioned before, one month of lost rent equates to an 8.3% loss in annual revenue for the unit. If you have a tenant who has run into some financial troubles, you may need to work with them for a few months. The goal here is not to give too much, and always make it work to where you receive all monies owed. Some options are to add to the following month’s rent, add to the end of the lease, and be sure you are paid in full otherwise. As said earlier, residents may talk. You might requests for assistance.
Additional Revenue Streams
You probably made this investment for the same reason we all got into this business, to make additional money. It makes sense you look at all potential ways to make additional revenue, here are a few ideas:
Charge for an accent wall
Upgrading features/appliances in units
These are just a few ways we at Elite Capital Investment, LLC look at every property we take over, and start to manage. Remember the reason you got into this business was to either make more money or wealth preservation. So make each day count!