A vacant property doesn’t generate income. The longer a property is left vacant, the more income is lost. Smart rental owners understand that achieving a shorter vacancy cycle is one of the keys to maximizing income and overall returns on their real estate investments. When playing the rental property game, time really does equal money.
Issues For Landlords to Consider
The “Make-Ready” Process
The “make-ready” process is all about maximizing the property’s appeal to prospective tenants, while at the same time balancing cost and value. The goal is to provide an appealing and functional property that fits the needs of the target tenant market, while being careful not to under-spend on needed items, nor overspend on unnecessary upgrades. Perhaps the easiest way to illustrate the point is with three examples:
“Skin-flint Sally”
If Sally had her way, she would never spend money. No paint, no repairs, no updates, “The tenants can take it or leave it,” is her motto. Sally believes that carpet lasts twenty-years and paint lasts 10 (they don’t). She thinks roofs last forever and a blue-tarp is a permanent fix. If she does have to replace or repair items she always goes with the absolute cheapest regardless of quality or serviceability.
“Extravagant Ernie”
Ernie is exactly the opposite of Sally — he wants to overspend for everything. He doesn’t understand that no matter how “nice” he makes his $900.00 a month rental, he is never going to get $2,000.00 a month for it! Ernie fails to realize that a rental is a business just like any other business, and just like it’s a mistake to run your business into the ground (as Sally would) it is equally unwise to spend lavishly on items that add no real rental value to the property. Ernie is the guy who puts imported tile from Italy in his $900 rental when good old American made tile would do just fine.
“Profitable Paul”
Paul understands that eye appeal goes a long way towards finding great tenants fast. Well-maintained properties attract rental applications while neglected properties scare potential tenants off. He’s not afraid to replace the carpets when they need it, but he is also careful to not overspend on luxury carpets, nor under-spend on inferior grade materials that will wear out prematurely. Because he doesn’t always go with the cheapest (but not the most expensive either) his properties tend to wear well and his repairs are less frequent. While he spends more on his properties, his returns over time are substantial.
Marketing
Having an appealing property that meets the demands of the tenant market does you no good if nobody knows it’s available. Once the property is in rent-ready condition, it must be marketed widely in the places where tenants are looking.
Gone are the days when a classified-ad in the rental section of the local newspaper will suffice. Today’s renters shop online, and if you aren’t familiar with (and using) the many dozens of popular renter portals found on the web, then you’re already behind the eight-ball when it comes to finding good tenants and shortening your vacancy cycles.
How Professional Property Management Shortens Vacancy Cycles
As an example, Real Property Management of Sarasota & Manatee helps landlords decrease their property’s time on the market with an organized and planned approach to the make-ready process, and highly effective, deep-penetration marketing campaigns.
The “Make-Ready” Process
For new properties we take on, our first step is a “Make-ready Walk-thru” tour. A room-by-room paper checklist is used to annotate the condition of the property and make recommendations regarding any repairs or upgrades that may be needed. Because of our long experience managing repairs and upgrades to all types of properties, we share our opinions as to the best, most cost-effective ways to handle such issues.
EXAMPLE: We recently took on the management of a property for an owner who was moving out of state. The owner knew that the tile they had installed on their backyard patio years before was extremely slippery when wet, and while they had become used to it, they realized it would expose them to legal liability if a tenant were to be injured in a fall.
They planned to rip out the old tile and install new, non-slip tile — a relatively expensive proposition. We suggested that they professionally install indoor/outdoor carpeting over the existing tile, which would give a fresh, clean look to the patio, and eliminate the liability issue. The suggestion solved the problem and saved them nearly $2,000.00 vs. their original plan.
For new properties we’re onboarding after the rent-ready inspection is complete and our recommendations have been made, we help facilitate the repairs/upgrades to ensure a smooth and timely process by coordinating vendor access, ensuring work is completed, and acting as an intermediary on behalf of the owner.
For existing properties where a tenant is moving out, and a new tenant needs to be found, the process is essentially the same. The departing tenant is given a comprehensive move-out checklist 60-days before move-out that explains our expectations regarding the condition the property is to be left in, and what they have to do to get back their security deposit.
At move-out, we conduct a thorough walk-thru inspection where the condition of the property is assessed, and any required cleaning/repairs are immediately ordered. Damage caused by the departing tenant above normal wear-and-tear is charged against the tenant’s security deposit.
NOTE: During these walk-thrus, we’re particularly on the lookout for two types of issues:
- Health and safety issues that may potentially expose the property owner to legal liability and monetary damages.
- Chronic conditions that although minor on their face, may contribute to accelerated degradation of the structure over time, such as a relatively minor drip, that could lead to extensive mold damage if not addressed immediately.
Regardless of whether it is a new property or a tenant move-out, once the property is cleaned, repaired, and in rent-ready condition, the marketing process begins!
Listing
Today’s tenant almost exclusively uses the internet to find their next home. They expect a media-rich search experience with lots of photos, plus video. They also want online scheduling and an online application process. Click Here for an example of what today’s tenants expect to experience when shopping for their next rental online.
We use property “syndication” technology to fast-blast our vacancies to virtually every major rental portal where tenants search online. The number of sites we syndicate our vacancies to is literally in the hundreds, but some of the major players that you likely know of include:
In Conclusion
Vacant properties cost landlords money. The shorter the vacancy periods between tenants, the higher the return on investment for rental owners. Shorter vacancy periods can be achieved by optimizing for two things:
- Fast, efficient, and cost-effective repairs and maintenance that allows for properties to be seen in their best light.
- Broad-based marketing campaigns that appeal to modern renters with varied and extensive media, and ease-of-use functionality like online showing scheduling and applications.
The name of the game is to get properties ready quickly, attract as many prospective tenants as possible, and make it simple for them to apply — all while keeping down unnecessary expenses, but not skimping on the must-haves.
About The Author
John Michailidis, JD, is the broker/owner of Real Property Management of Sarasota & Manatee, a Sarasota, FL based residential property management company providing both Full-service and Lease-Only services to local area landlords throughout Sarasota and Manatee counties, Florida. If you own residential investment real estate anywhere in Manatee or Sarasota counties, do feel free to reach out to our team at 941-216-0005, or through our website.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
