Vacancy can be a drain and be expensive – how to avoid loss of income
Asset location and the general rental market have a significant impact on your rental vacancy, but here are some things under your control that you can do to keep your vacancies low.
Here are some tips to keep vacancy under control:
1. Keep your properties in good condition.
Everyone likes a well maintained and clean building. Recognize that tenants come to work every day and want to feel good about where they work. While the immediate payback might not be a higher rent, there are several other reasons for keeping your building in great condition: 1. You will attract better quality tenants. 2. Your quality tenants will stay longer, and 3. When the rest of the market is suffering from vacancy – you will be full!
2. Keep tenants and guests safe.
Unfortunately, tenants and owners are feeling less secure nowadays. You can implement some simple but effective security measures. Automatic locks that secure doors after hours, good lighting, fencing and inexpensive common area web cams (and this way you know what is going on).
3. Keep your rents at market.
As the saying goes “Pigs get fat, hogs get slaughtered”. Sure, sometimes you will find the tenant willing to pay over market, but don’t count on it, there is plenty of availability in our market. Be realistic with pricing, look at neighboring property asking and going lease rates and terms. Every day that the property sits empty, you are losing money.
4. Be nice.
This could be the simplest tip of all, yet the most effective. Get to know your tenants and show them you care. Be timely with appointments, running repairs, and providing general help. Be nice but firm and stick to your commitments – kind of like being a parent.
5. Vacancy financial reserve.
This won’t necessarily keep your vacancies lower, but you’ll sleep better at night. Vacancy Reserve is not just an underwriting criteria done by the bank for a refi or a purchase loan. It’s a real thing, especially during uncertain times like these. It’s never a bad idea to keep some money in the bank to cover unexpected vacancies. How much to keep in reserve? Look to cover your expenses and loan payments for a period of at least the “average months to lease” your market for your property type. This could be two months’ worth of expenses and loan payments for apartments or small industrial, or up to six months’ for a retail or an office space.
What do I do?
My primary focus is in commercial real estate investment sales and leasing. I have extensive experience brokering commercial and investment property sale and leases in the San Francisco bay area. I am inquisitive, analytical and strategic, I enjoy learning about your CRE goals, and helping you develop and implement your strategic plan. My clients enjoy working with me because I am competent and realistic; and I communicate frequently and openly.
Testimonial:
“When I considered selling my share of an Oakland apartment building, I knew who to call. Ces helped me evaluate my offers and the subsequent 1031 exchange so that I could move forward with confidence. I recommend Ces to anyone that is considering selling or buying investment property.
– John Omernik
Founder and Chief Executive
The Little Spanish English School
A non-profit based in Mexico City