Does your heart skip a beat when you get a call from your tenant saying they won’t be renewing their lease? Or even worse, that they need to terminate their lease early?
I get it – it’s awful news.
Your rental property may sit vacant for months. You must continue to shell out the mortgage with no rent coming in. And let’s not mention the turn-over costs every time you get your place ready for a new tenant.
Fact is, if you don’t manage vacancy properly, it can be one of the biggest costs affecting your profitability as a rental property investor.
But we’ve got 13 awesome ways to reduce vacancy in your rental property.
These strategies are the same ones that I use to manage my nine rental properties. They have allowed me to have a near-zero vacancy rate over the past few years.
We’ll get into each of the strategies in detail below, but here is a preview.
The best ways to reduce vacancy for your rental property are:
- Buy the Right Property
- Secure Long-Term Leases
- Make Your Rental Property Attractive
- Charge Below Market Rents
- Create a Great First Impression with Tenants
- Make Timely Repairs
- Don’t Raise Rents at Renewal
- Give Small Tokens of Appreciation
- Market Your Rental Before the Lease Expires
- Market Broadly to Find New Tenants Fast
- Quickly Prepare Rental for New Tenant
- Make Leases Expire During Peak Times
- Consider Rent-to-Own Arrangements
With that, let’s get into this!
Note: The tips here are based on my personal experience and are not intended to be legal or financial advice. Please consult with your legal and financial advisors before making any decisions relating to the topics covered here.
This post may contain affiliate links. If you click on a link and complete a transaction, I may make a small commission at no extra cost to you.
1. Buy the Right Property
If you are haven’t bought your rental property yet, you need to make sure you are buying one that will rent well. That means one with strong tenant demand.
How do you do this?
At a high level, you want to buy properties in good neighborhoods. A stable or growing population is a good sign of that.
Plenty of jobs nearby is another.
If you live nearby, you should have a good sense of the desirable areas. If not, make sure you have a good real estate agent to guide you.
Now I am not talking about the most expensive areas of town – that usually doesn’t work well from a rental standpoint because the price to rent ratios are wrong. I am talking about areas that are stable and nice, and that a tenant would find safe and attractive, but not too pricey.
If you want a detailed look at how to figure out rental demand, my article takes you step-by-step on how to assess this and what data points you need to examine.
2. Secure Long-Term Leases
When listing your property for rent, signal that you are interested in a long-term lease. At a minimum, you should require a 1-year lease, but you should state that you prefer two years. You can also offer a discount if the tenant chooses the two-year option.
Once you start talking with applicants, I would reinforce that you have a strong preference for a longer-term lease. You never know how the applicant might respond. I have had renters wanting more than a 2 year lease when I mentioned it.
When there is a lot of interest in your property from multiple applicants, you can let them know that their application will be stronger if they are willing to sign a longer-term lease.
This is perfectly legal so long as you don’t discriminate against your tenants based on illegal factors, like race, gender, etc.
Sources: Nolo and The Federal Fair Housing Acts
Finally, put in your lease that renewals are automatic unless either party gives notice of non-renewal. I would add in modest rent escalators that kick in at the end of the lease term. I use 1%-2% and nobody objects. This way tenants know what they are signing up for if they choose to renew and you don’t have to fight about it come renewal time.
3. Make Your Rental Property Attractive
If you want to attract long-term tenants, make sure that your rental property looks great, both inside and out.
You want your tenants to envision putting down roots there. That’s not going to happen if your property is dirty and run down.
So make the investment to spruce up your rental – it will pay off in the long run.
4. Charge Below Market Rents
One of the best ways to attract a quality long-term tenant is to offer great value.
How do you do it? Set your rent a little bit below market and offer a sparkling clean property in a great neighborhood. You will attract top-notch renters who know they are qualified and are looking for a good deal.
When they find yours, they will want to pounce on it. That’s when you are best positioned to lock up a long-term lease. They will know they are getting a great deal and won’t want to lose it.
How do you figure out market rent? You can use Rentometer and Zillow (they offer rent Zestimates on properties as well). If you want a more detailed guide on how to determine market rents, check out my article for step-by-step details on how to do this.
5. Create a Great First Impression With Tenants
When your tenants first move-in, you want to make sure you make a great first impression.
How do you do this?
Be professional and helpful from start to finish. A small welcome gift waiting for them when they move in is a nice touch.
Be especially responsive during the first few months. Tenants often find little things that need to be addressed within those early months (especially the first couple of weeks). Usually minor stuff that gets overlooked during inspections or that the prior tenant did not mention to you.
This is your chance to shine.
Be super responsive and take care of the issues (assuming they are reasonable) without complaint. That can set a positive tone for the rest of the tenancy and make them far more likely to renew the lease with you.
It’s all about fixing a positive image of you in their mind at the start. That will pay dividends later.
6. Make Timely Repairs
This is an obvious one but needs mentioning. Make repairs in a timely fashion – show that you are committed to being a good landlord. They will remember that.
If you don’t make timely repairs, they will remember that too and won’t want to renew the lease.
Talking about repairs – if you want to avoid serious and costly repairs, make sure you conduct periodic inspections of the property. This will prevent small problems from turning into big problems. As a bonus, you can make sure your tenant is complying with the terms of the lease.
This will also help with vacancy because you will be less likely to make major repairs when your tenant moves out (and thus delay getting a new tenant in).
Of course, I don’t want to create the impression that you should be a pushover. Be friendly and reasonable, but stand firm when the request or complaint is out of line (especially if the lease is clear on the issue).
You don’t want to make a habit of letting lease requirements slide – it creates a bad precedent.
7. Don’t Raise Rents At Renewal
If you want to minimize vacancies, don’t raise the rents at renewal time. As I discussed before, your lease should have a modest rent escalator that kicks in at the end of the term.
If your finances can afford it, you should let your tenant know that you will waive the escalator if they are willing to renew for a two-year term.
That will be a big token of goodwill. There is a huge difference between agreeing to keep the rent the same when both parties are just negotiating on whether a rent increase is fair.
But it is another matter entirely when the tenant knows they need to pay the rent escalator if they want to renew and you proactively offer to waive it.
It makes you look generous and makes them more likely to renew on those terms.
And if your rent was slightly below market to begin with, your tenants will see the obvious value of this latest offer by you.
If all goes well you have a chance to turn your two-year tenant into a four-year tenant. That’s a great way to cut down on vacancy.
8. Give Small Tokens of Appreciation
You can occasionally send tenants small tokens of appreciation. My favorite idea is a $25 Amazon gift card around the holidays. You can use this concept at other times too.
For example, when the washer was broken and I couldn’t get it fixed for a while (due to parts being unavailable), I threw in a $25 rent discount for that month for the inconvenience.
9. Market Your Rental Before the Lease Expires
Despite your best efforts, some tenants will leave. When that happens, don’t be caught flat-footed.
Put in your lease that you can start showing the property to potential tenants at least 60 days before the lease ends. Coordinate with them on showings and be reasonable.
This will allow you to get a big head start on filling the upcoming vacancy.
10. Market Broadly To Find New Tenants Fast
When listing your rental, take a broad approach. I list on Zillow and Craigslist. Zillow has become my main source of qualified applicants.
You can also ask your tenants for referrals. Let them know they will get a small gift if you sign a lease with their referral. A $50 amazon gift card works well.
Put up a “For Rent” sign on the property if it’s practical. If there are local venues where you can put up flyers, etc. take advantage of those too.
In short, market your property through as many outlets as you can.
Also, take professional photos, especially for your online listings. I have talked about this in my other posts, but it is really important to make your listing stand out.
A good set of photos doesn’t cost that much and can make your property look bright, airy, and crisp. You can use them over and over again too. They’re a good investment.
Also, when listing your property, make sure you include all of its advantages and features, including nearby amenities, shops, and major travel routes (including public transportation). If you are unsure how to begin, go to Zillow and see how some of your competitors in the area are describing their properties for rent.
And like last time, check market rents and make sure you are charging slightly below market. Target long-term tenants, etc.
With these strategies, I am usually able to fill the rental property before the old tenant has even vacated.
It’s a great feeling knowing that you won’t be missing a step between the old tenant moving out and the new tenant moving in.
11. Quickly Prepare Rental For New Tenant
Have a team of contractors in place to turn the property quickly when a tenant moves out. You should have a reliable painter or general handyman on-call that will touch up paint, make small repairs, and otherwise prepare the property for a new tenant.
You don’t want to be scrambling at the last minute to find someone.
12. Make Leases Expire During Peak Times
I try to make all of my leases expire during the summer months. Sometimes that means having an initial lease term that is a bit odd, like 17 months rather than two years.
That’s ok. Just be honest with your tenants about why you are doing this. I have never had anyone object.
In my experience, the summer months are great (spring’s ok too) because that’s when there is strong demand.
First, the weather makes it convenient to move.
Plus, school’s over, so you can get families who are looking to move after the school year.
Word of caution: Never let your lease expire near the winter holidays. People just aren’t moving between Thanksgiving and New Year’s Day. If you have your lease ending in late October, you could be sitting on a vacant property for two or three months (or even longer).
After all, who wants to move in the dead of winter?
13. Consider Rent-to-Own Arrangements
Rent-to-own arrangements can be lucrative and reduce vacancies because tenants often sign very long leases under these arrangements.
Rent-to-own agreements (often referred to as lease options) can be a good option if you don’t mind selling your property to the tenant and want to make some money in the meantime through an option fee and potentially higher rents.
If you want to learn more about this strategy, check out my article on the topic.
Conclusion
I have used the strategies outlined above to reduce my vacancy dramatically over the years.
As I mentioned at the start, my vacancy has been near zero on my nine rentals in recent years. But it wasn’t always this way. In the early days, I would sometimes have some of my properties sit vacant for months.
So I learned these lessons the hard way! But my rentals are humming along smoothly now thanks to these strategies.
I hope you find them helpful and best of luck on your rental property journey!
