It’s only natural that the current state of the economy will have a trickle-down affect on vacancy levels and the going rate of rental units. At a time when everyone is tightening their purse strings, it makes sense that people are far more likely to think twice before moving. For renters, the moving process in and of itself is a costly one: transporting furniture and belongings from one location to another, putting down security deposits, and sometimes multiple months’ rent. All of these costs add up quickly. So what does this mean for property managers and landlords?
According to a recent New York Times article (One Month Free? Rents Are Falling Fast), for the first time in years, the city’s rental rates are down and vacancies are up. In an effort to fill units, landlords and property managers are offering incentives like a month’s free rent to get tenants in the door. While it’s true that there are many factors that make the Manhattan market different from other sectors of the country, there’s no denying the problem extends further than New York.
A Yahoo article on rocketing rental vacancies declares this a “renter’s market” and goes on to cite the top 10 markets with vacancy spikes, which include (among others): Salt Lake City, UT; Raleigh, NC; Seattle, WA; Portland, OR; San Jose, CA; and Boston, MA.
Even if you’re not in one of these markets, chances are that you already have—or will soon see—some recession repercussions. Be that as it may, there’s no need to panic. Just a few simple strategies will help you stay on top of your rental game, bad economy or not.
Know your market.
Now more than ever, make sure that you are going on Craigslist and other local rental posting sites to compare your rental rates with those of your competitors. If your prices are on the higher end, you may be guaranteeing that those renters who are out there won’t even consider your property. Also, if you’ve only been relying on one rental search engine to post your available units, this is a great time to expand your reach to other sites. (We like Rentvine.com; also be sure to check out online offerings from your local newspapers and other publications.)
Advertise like a pro.
Speaking of listings, make sure you are putting more effort than ever into selling your unit. Write up a few well put-together sentences that really highlight your unit’s amenities and the characteristics that make it more desirable than your competitors’. Do you pay heat and hot water? Are your units larger than most? Do you have a pool or in-house washers and driers? Perhaps a convenient location that will save your tenants commuting costs? If so, be sure to mention all of this. It could be the difference between a would-be tenant checking out your place and someone else’s.
Also take care to add some punch to your listing title or headline to make it stand out from the rest. Rather than writing “One bedroom/$950” in the headline, write “Spacious one bedroom apartment in convenient downtown neighborhood, heat and hot water included.” If you’re offering incentives, this should also be clearly stated in your listing headline.
However frustrating the economic climate may be right now, it’s crucial to bear in mind that it’s better to fill your units by using incentives or taking rents down a bit than letting vacancies build up. Yes, your profit margins may decrease and, obviously, this is not ideal. But it’s better than letting units remain empty. Also, be willing to negotiate. If you find a tenant with a good credit report and track record, you may be better to negotiate and get them signed up than to leave your unit vacant. Consider lowering the rent a bit (but know your bottom line!), paying rental agent fees, offering a month’s free rent, or one month less down at move-in.
This may also be a good time to be more flexible with your rental qualifications. For example, if you generally don’t allow college students, perhaps this is a good time to consider them. Same goes for pet owners. This is not to suggest you deconstruct your entire rental procedure—again, remember, these problems are only short-term—but if you find a particularly responsible college student with a co-signer or a renter with a small pet and lay down very specific rental guidelines, this may be the time to consider expanding your pool of potential tenants a bit.
There’s a lot of gloom and doom news out there right now about the bad market and how it pertains to rentals. Certainly, it’s a time for everyone to be very conscious of their spending and the market around them. However, don’t despair. Regardless of the current economic situation, people will always need a place to live. Just be aware of your local market, stay abreast of the tactics other property managers and landlords are using, and be creative and flexible. And remember, although your profit margin may dip in the short-term, by following these strategies you’ll be better able to keep those vacancy rates low and will weather this economic durntown just fine in the long-run.