The benefits of investing in rental property are well-documented: A good source of steady cash flow, the property can keep appreciating in value, and you get to become a landlord – a title enjoyed by about 11 million individuals in the United States.
However, owning rental property is not without its challenges. Because of the high investment cost, it can take a long time before it becomes profitable. A low occupancy rate is one of the things that will hurt your cash flows.
As a landlord, you have to find effective ways to keep your rental property occupied throughout the year. If you’re wondering how to do this, you’ve come to the right place.
Read on to learn what you can do to maintain a high occupancy rate.
About 36 percent of American households are renting their home. The number of Americans who’re preferring renting has been on the rise, reaching a 50-year high in 2019.
As a rental property investor, this is music to your ears. It means there’s a good market for your rental properties.
However, just because more and more people are renting doesn’t automatically mean tenants will be fighting to enter your rental property. A lot depends on the location of your rental building. If it’s in a location where the number of tenants is low, it’s possible that you’ll struggle to find tenants, especially if there’s an adequate supply of rental units.
As such, it’s essential to do proper location research before buying a rental property. You want to own it in a location that has a high population of renters. In many cases, these are locations where the younger generations live.
There are building standards all residential properties must meet. However, there are investors who go above and beyond to build a property that stands out.
If you’re building a rental property from scratch, focus on delivering a property with a superior build. The design should be excellent and modern. For instance, if trends show that the modern renter prefers open kitchens and big windows, your property should have that.
And if you’re buying a property that’s already developed, ensure it’s a property that meets modern standards. Tenants are looking for extra features, such as smart doors or lights, and some are willing to pay a little more for them.
Ultimately, a quality property attracts tenants easily. If a tenant has to ask about the quality of painting on the walls or the quality of the flooring, you’re going to have a hard time keeping a high occupancy rate.
Landlords have legal rights. Tenants have rights, too.
Beyond this, it’s not uncommon for landlords to develop tenant policies that spell out what a tenant can or cannot do. For example, while it’s generally not illegal for tenants to keep pets in their rented properties, a landlord has the right to ban pets.
It’s okay to set tenant policies, but be careful about the nature of the policies you’re setting. Some policies can actively work against you. There are pros and cons of allowing tenants to keep pets, for instance, but if your target market primarily comprises pet-loving individuals, you might struggle to attract and retain tenants.
In addition to this, put in place a swift dispute resolution process. Tenants will always have complaints that need your attention. Ignoring some of these complaints or taking your sweet time to address them is a sure way to lower tenant satisfaction.
You already know this, but in case you need some reminding, tenants are not created equal. This is why you must strive to bring in quality tenants.
At the end of the day, you want tenants to pay their rent on time. They might as well do this without fail, but what if they make the lives of other tenants miserable? Think of those tenants who transform their apartments into nightclubs, disturbing the peace of the neighbors.
If you don’t effectively act to curb such behaviors, other tenants will leave and likely leave bad online reviews about your property. Then you’ll start wondering why you’re having a tough time filling the vacant units.
Brining in quality tenants goes a long way in helping you maintain a high occupancy rate. Don’t just focus on a prospective tenant’s ability to pay their rent. Know their backgrounds as well. Call up their previous landlords and try to establish the kind of tenant you’re about to bring in.
One of the most effective steps you can take to ensure your property is ever-occupied is to hire a property manager.
It’s understandable that you might not see the value of hiring a property manager, especially if you own a few units and have the time to manage them. However, there’s a lot that a property manager knows that you probably don’t.
For instance, property managers know how to screen tenants without violating any discrimination laws. They know how to market a property and handle tenant issues diligently.
A property manager is also your advisor. They’ll let you in on some of the things you can do to make your property more attractive to tenants.
Property managers aren’t created equal, though. It’s your responsibility to find a property manager who will do the job properly. Here are some questions to ask when vetting a property manager.
A high occupancy rate is the dream of every landlord. It’s achievable, but you need to put in the hard work. A lot goes into keeping your property fully occupied, and it starts from purchasing the right property in the right location. Hiring a property manager from early on will make your work a lot easier.
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