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Help, I Can’t Find A Tenant For My Vacant Property

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Having a vacant property sparks a ton of fear in any landlord.
When will it get filled? Will I find good tenants? Will anybody even call?

finding tenants for a vacant property

Of course the longer you’re at it the smaller these fears become, although deep down they never go away.

So what do you do when your property has been vacant for a week or two and the calls and inquiries start to dry up?

Panic is the first thought that pops into many new landlords minds, but rather than panicking I’d suggest you focus instead and here’s what to focus on.

Focus On Marketing Your Vacant Property

If your property has been vacant for a week, two weeks or even longer it’s time to double down on your marketing. Especially in a slower market!

In a slower market with high vacancies and fewer tenants looking for places many landlords just accept the fact it takes a long time to find tenants. Many landlords even drastically lower their standards and end up accepting poor quality tenants simply in an effort to avoid paying out of their pocket on their vacant property.

I recently explained why it’s better to stay vacant than accepting bad tenants (No Tenant Is Better Than Bad Tenants) and if you find yourself considering simply accepting a warm body to fill your vacancy you may want to go read that first.

Rather than going that route, you’ll want to focus and double down on marketing your vacancy.

So how do we do that?

Well, we want to use a strategy I call “Be Everywhere”.

The Be Everywhere Strategy of Marketing Your Vacancy

The Be Everywhere Strategy is exactly as it sounds, you end up showing up everywhere tenants may possibly be looking.

It’s the equivalent of a all out blitz in football where you send everyone after the quarterback, except this time the quarterback is your potential tenant.

All of this starts with having a good ad, so you may want to start by reviewing your ad copy to ensure it’s sending the right message.

I can easily write a five thousand word article breaking down ad copy writing, but I already cover part of it in my Tenant Screening Course and through my consulting services so I’ll give you the short version here.

Focus your ad about your properties on the benefits it has, not the features!

As an example a feature is a washer and dryer in the property. Nice, but boring.

The benefit is “save time and money with your own in unit laundry provided”. See the difference?

Anyway there is far more to it, but that would be your first step. Review your ads and your pictures you include with your ads to make sure they show you in the best light.

Next, you need to find out where tenants are searching for properties like yours.

Use Google to help you with this by typing in what you expect tenants would search for to find properties like yours in your area.

This search would look like “three bedroom townhouse Waco” or “two bedroom house Orange county”, basically something based on the bedrooms, maybe including the bathrooms and your town, city or county.

Once you see the results you will want to “Be Everywhere” that shows up in the first three to five listings. If it’s Zillow, Craigslist and Facebook Market, you want to be there, whether it’s paid or not.

It Can Cost Money To Make Money

Far too many landlords get tight when it comes to advertising their rentals and they will only advertise on free sites. That’s great in a low vacancy market where tenants are a plenty but when vacancies are higher that $100, $200 or even $500 you spend on advertising could fill your property up saving you the higher mortgage and utility costs you’d end up stuck with instead.

So go ahead and market the heck out of all the free sites, but don’t exclude the paid ones especially if they show up int he top of your search returns!

Bonus Vacancy Marketing

I have two additional suggestions to help you “Be Everywhere”.

Number one, check out the local area to see where you can place some pull tab flyers.

This includes local grocery stores with bulletin boards, maybe a nearby community center, convenience store or other places where potential tenants may see it. You never know who might see it or who might have a friend they know is looking for a place in the area.

Number two, put a for rent sign in the window of your property or out on the lawn if possible.

Similar to the pull tabs, if people are looking in the area, or their friends want them to move closer and they see the sign you could get some pleasant unexpected calls.

I get a ton of calls off signs we place in our vacant properties and have actually spent money for custom Fro Rent signs with our logo and phone number prominently displayed and it’s paid itself back many times.

Just to close off this topic, don’t panic when you’re not getting the calls or the traffic to fill your vacancy. Instead double down on your marketing, “Be Everywhere” and get that property filled!

Should You Charge A Tenant Late Fees?

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Tenant late fees - should you charge them?

Tenant late fees are a touchy subject, and often out of a landlords control for several reasons.

First, if they don’t have money for rent, how will they be able to pay additional fees? You may just be setting them up to midnight move on you which leaves you not only out of rent, but now facing lost time marketing, potentially cleaning and repairing the property and extended vacancies.

Second, what do your local laws state about these types of fees? In my locale we’re not allowed to “penalize” our tenants for late payments, although there are workarounds such as late payment processing fees, discounted rent for paying on time and more.

Third, what do they accomplish? Do they make tenants vindictive? Do they Reinforce the message rent is due ON TIME?

My Thoughts On Charging A Tenant Late Fees

Personally I believe you need to have late fees as part of your lease agreement.

They need to be laid out as to the exact amount whether it’s a flat fee or per day, how it’s calculated and when it starts becoming applicable. And this section needs to be walked through with the tenant during the lease signing!

Better yet, it should be initialed beside by the tenant to show it was gone over!

You want to cover your position as well as possible, so the additional important point is you need to understand how your local laws work regarding these fees.

There may be caps, there may be specific wording, there may be specific phrases you have to use or avoid.

You may not be able to call it a penalty, but can call it an administrative charge for late processing.

You may not be able to charge an excessive penalty, so you need to dig and find out what dollar amount could be deemed “excessive”.

You really just need to do your homework on this to make sure you’re covered.

Charging Tenant Late Fees

This is where it can get interesting. Some landlords actually use late fees as additional income streams.

My stance is they are a warning and they cover any additional costs I may incur. Typically, as the majority of my mortgage payments aren’t due on the first anyway and I have funds to cover shortfalls, I don’t get hit with any out of pocket costs due to late payments.

But at the same time, I don’t want to allow tenants to believe they can simply pay late any time they want. So make exceptions, a lot of exceptions and exceptions I cover with documented letters to the tenant so I have a paper trial!

I may waive any charges for the first offence if they’ve been a good tenant to show I appreciate them.

Or if they have been with me for quite a while and I’ve never had any previous issues.

Or if something unexpected has come up. And just to clarify this, a broken vehicle expense gets far too over used. It happens, but don’t get taken advantage of.

The important part being, if you do waive it, explain to them this is a one time waiver and if it happens again they will get charged. You should also explain you appreciate there history with you and that’s why they have earned this exemption. Then make sure it’s on paper and sent to them.

By not charging the first time and explicitly pointing out it is a one time “get out of paying late charges” award, you do two things. You build a better rapport with your tenants and you establish that there is a penalty if it happens int he future which should be a deterrent.

These are just my thoughts, but they’ve worked well over the years for me. What do you do for late charges or fees? Leave a comment below with your thoughts!

No Tenant Is Better Than A Bad Tenant

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A bad tenant can be a nightmare.

Yet many landlords, especially new landlords, get caught up in having to fill a vacancy as quickly as possible no matter who they put in place.

What a mistaka to maka…

Bad tenants are worse than no tenants!

As more and more tenant friendly laws come into place the protection a landlord may have regarding his property evaporates.

Evictions can often take months with tenants being able to stall and launch appeals often on a whim, especially in the pro-tenant regions.

Months that you’re footing the bill and that typically end up with additional thousands on the back end cleaning up the property.

When you initially do the math, you may think putting the first borderline acceptable tenant in place is the right thing to do as it saves you paying a mortgage payment out of pocket along with the additional expenses of taxes and insurance and any possible utilities you have to cover.

But that $1,000 or more you save gets savagely eaten up when that bad tenant ends up not paying for several months and leaves you three thousand dollars worth of cleanup, repairs and additional vacancies.

I’m Not Trying To Scare You With Bad Tenant Thoughts

But I am trying to scare you!

Scare you from making dumb foolish mistakes that new landlords make.

Saving pennies to lose dollars is not a wise decision.

Your first line of defence as a landlord is making sure bad tenants never ever get into your property. By accepting that first borderline tenant just to save a few bucks you’re taking your defence off the field!

Being a successful landlord requires following proven strategies, sound business practices and lots of time.

By having strategies to buy proper properties, to screen to find the proper tenants and by giving yourself a decade, or much longer, for tenants to pay your mortgages down you can be a successful landlord.

Being A New Landlord Is A Learning Experience

As landlords we’re constantly learning. That’s why it’s important to find as many resources as possible to educate yourself, to warn you about potential problems and to guide you to your future success.

I’m on a self driven mission to push out a ton of short, helpful (well I’m hoping they’re helpful) articles over the rest of the summer.

I’ve joined a ton of landlord groups in the last six months where I’m trying to actively help and even mentor folks in some cases and there is so much confusion out there.

Perhaps I’ve simply forgotten everything I’ve learned or maybe I was fortunate to have stumbled onto the right resources as I became an educated landlord, but there are a ton of landlords and potential landlords that need help.

So, if you’re one of these individuals and have a question you’d like addressed in an article, leave me a comment below, or if you’d prefer to be slightly anonymous email me and I’ll address it in an upcoming article to help others as well.

Screening Tenants Tip – Ask Good Questions

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Screening TenantsScreening tenants with a consistent process can be a huge key to being a successful landlord.

First off , screening tenants properly (at least in my mind) is the most important step a landlord can take if they want to stay in the landlord business.

Too many bad tenants can wear a person out which means getting good people in your properties that won’t destroy your rental, that pay on time and that stay extended periods simply make life easier.

Part of a consistent process involves asking the same questions over and over and with enough experience you start to learn little quirks and potential problems by the responses you receive.

Additionally by using consistent questions you can stay out of trouble with every one from fair housing groups to discrimination claims.

 

Important Questions For Screening Tenants

Some of the important screening questions you can ask involve when do the tenants want the property.

By asking this you’ll have a clearer idea if they are serious ( which would be a response like “We need something before the end of the month”) or if you should be moving them down the list of priorities (when they respond “We need something in the next three to six month”).

Your time as a landlord is important so you need to focus on the serious tenants, not the Lookie-Lou’s.

You can get so involved chatting and talking about how great your property is to someone and suddenly you’ve lost 40 minutes only to discover they weren’t even close to ready to find a place. By asking them when they need a place up front it can save a lot of your time.

Another important question is if they have given notice to their current landlord.

If they respond No, it may be a red flag that they won’t be able to commit properly to moving in and it suggests they may treat you the same way in the future.

As part of a consistent process and the more times you ask questions like these you’ll start to see patterns as well.

Tenants who beat about the bush or simply evade answering will start to stand out and you’ll be able to weed out problems before they even occur.

Perhaps most importantly if you’re doing these screening questions on the phone or via email before you even set up any viewing appointments it will go a long ways to saving you from wasted showings and more lost time!

Would You Like My List Of Screening Questions?

With over 1,500 tenants during the last decade and a half I’ve asked a lot of questions and streamlined my process down to just seven questions I ALWAYS ask tenants.

These questions are just such a part of my process now it makes it so much easier to avoid those problem tenants that cause landlords so much headache.

Obviously it’s not a guarantee, as there are other factors that can come into play, but it’s a great way to narrow down the field of candidates.

If you’d like to grab my list of Seven Questions, just fill in the form below and I’ll email them off to you with some additional tips and suggestions about how to ask them and what their responses may mean!

And, if you have any questions or suggestions for other landlords about screening tenants, leave a comment below!






Grab the 7 Questions Guide right now
so you too can avoid problem tenants!

Marketing Your Vacant Property

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A Vacant Property Is A Problem Property

When you have a vacant property, you have multiple problems.

  • You’re losing income
  • You’re paying out of your pocket to support the property
  • You insurance may go up if it’s vacant more than 30-60 days (did you realize you often need to report extended vacancies to your insurance company or your insurance is void?)
  • No one is looking after your property (other than you)
  • Vacant properties chew up your personal time (showings, inspections, phone calls)

None of these are fun and often they lead to resentment of being a property owner, an investor and a landlord as it suddenly has become work. Costly work!

Filling A Vacant Property Takes Work

I’m not going to lie to you, filling vacant properties does take work, but if you do the majority up front it can save a ton of costly work involved with extended vacancies!

One piece of that work is effective marketing. Or as it’s commonly called selling!

Yep, you need to be able to sell your property to prospective tenants. Because if you’re not, someone else down the line will and you’ll lose out on a potential great tenant.

Here’s my secret tip (it’s really not that secret, but I’m amazed how surprised many landlords are when they hear it), write an awesome ad for your property and use it over and over and over!

For each of my units I have an ad that I’ve written up that I have saved as a Word document. That original ad may have taken two or three hours of writing and research, but I use it over and over again so over the lifetime of a property that extra work in the beginning pays off multiple times over.

Often I will have two or three variations of the ad that I’ll have saved in that Word document so I have different versions for a vacancy in the spring, int he summer or perhaps the winter.

Sometimes I create a new version by cutting and pasting from my original versions as times and circumstances change or as I find more effective ways to attract tenants.

Selling Your Property in Conversation

But it doesn’t stop with the ad. The ad is just to get someone to call or email or text me.

Now that I’ve got a live person showing at least a bit of interest it’s time to start selling my property!

This does get into some crossover at this point though. There’s no sense selling someone on your property if you’re not going to be renting it to them which is why it’s important to start asking some screening questions right away as well. (You were aware I have a screening course that helps you with this?, You can order it here, How To Screen Tenants Like an Educated Landlord)

Questions like when will you be needing it? If they are just looking or it’s three months down the road you may not be interested in marketing as hard. If it’s in the next several weeks, well time to tighten that sales hat up a notch or two.

During those screening interview stages you need to be able to promote the important parts that will add value for the tenant and put your property int he best light.

This could involve finding out your tenant works only a few blocks away, look at the money they will save on the commute! Or if you accept pets and they have a dog knowing that the dog park is just down the street increase the value and the importance of your property.

They have two elementary age kids? Well, were they aware one of the best schools in the district is only two blocks away? (Obviously you need to be aware whether the school is one of the better ones, but that’s part of your original homework, don’t be “that” landlord or “that” salesperson who makes up stuff just to get the deal closed!).

Selling Your Property In Person

You need to sell your potential tenants on your vacant propertyOnce you’ve confirmed the potential tenant is a qualified applicant, you need to get them to the property, and sell in person.

Now, if you’ve got a great property it should sell itself. Although it may still require you pointing out what’s so great about it.

If you have a “less great” property, you may want to step back and consider what you can do to change that.

When I’m showing my property to possible tenants I often ask them how long they’ve been looking for a place and what they are finding out there. You know what comes back?

Comments like “Everything I’ve looked at so far has been a dump”, “The last place we looked at hadn’t had a good cleaning in years” and “There was half an inch of dust on the baseboards, I wouldn’t let my pet live there”. If your property resembles any of these remarks you have an uphill battle when it comes to filling that vacant property.

95% of my tenants stay with me over a year. The majority are closer to three, so every time a tenant vacates a property and they have been there over a year, we repaint. We can do it quickly as I’ve shared multiple times in my How Painting Can Save You Time article,

We also typically bring in professional cleaners after painting and any repairs are done.

Just by doing these two strategies we end up getting comments like “The place is so much cleaner than everything else I’ve seen” and “Is this newly painted, it looks so nice!”

That’s the type of feedback that gets your vacant property rented quickly. And we all want to rent our property quickly when it’s vacant right?

Marketing Recap

Are we in agreement that having a vacant property is costing you money?

If so, then you need to take some steps to remedy that and let’s recap what we’ve talked about.

  1. You need a good ad!
  2. You need to sell to prospects when they contact you and
  3. You need to sell the benefits of your property when they see your property.

Can you do all that?

If you can’t, tell me in the comments below what the problem is. Just to spice it up, maybe include part of your ad if that’s your problem. And maybe, just maybe (ok I probably will), if I get enough responses I will help someone fix that ad up a bit.

If it’s an issue with how your property shows, explain it below and we’ll see who needs my help the most!

Oh and don’t forget, if you have other landlords who could use any of my information, share this stuff! If it’s helping you it will probably help them too!

Why Vacancies Can Kill Your Dreams

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Dealing with Vacancies – The Silent Profit Killer

Dealing with vacancies in a rental propertyYou work hard, you save up and you finally purchase that rental property you wanted as a long term investment, it should be all easy now right?

You build it (or purchase it) and they will come, except they don’t, and suddenly you have a vacant property that you’re paying for out of your own pocket!

Worse yet, if you’re like so many landlords out there you’re only making a hundred dollars cash flow after all your expenses are covered. That one month vacancy suddenly wipes out your entire profit for the year, if it drags out to two months you’re suddenly working for free for a couple years!

No one wants to work for free!

An Exercise In Math

Hopefully you have a good idea of what your expenses are for your property. Typically this will include a mortgage payment, taxes and insurance. Perhaps on top of that condominium or HOA fees, maybe even local recycling fees for renewable programs. Maybe you even include utilities (which is rarely a good choice btw, here’s an article explaining the pros and cons of including utilities).

Whatever that total number you come up with is your absolute break even number you have to cover each month. Why don’t you take a moment and try and figure out what that is, I’ll wait here…

…

…

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Got it? Well now let’s talk about what number Educated Landlords use.

They take that number and add another 5-10% for maintenance and another 5-10% for vacancies and that’s the REAL number they need to cover each month.

For maintenance if the property is recently fully renovated or new it will be closer to 5% or even less, for older more worn properties it will be closer to 10% or even higher. The vacancy rate is safest if you take the current local vacancy rate and double it, so if it’s 4% use 8%.

Currently our local vacancy rate is between 8-10% depending on which report you look at, I kind of put a ceiling at 10% since I seem to have minimal problems ever filling properties.

Bottom line whatever that number is, is what you need to cover each month, or worse what you lose each month it’s vacant.

I know, some folks will say you’re not really losing the extra percentages you tack on, but I disagree. If it was full you would have those coming in and flowing into a reserve fund to cover repairs and vacancies. Without it coming in, you still need to do ongoing maintenance and if it’s not flowing in to cover vacancies, it’s bleeding out to pay for the vacant space.

Look Hard At That Number

Whatever that number is, it’s important. It might be $1,000, it could be $1,500 perhaps it’s even higher, whatever it may be it’s coming directly out of your bank account, so don’t you think that should be a priority to fill it?

Yet I hear all the time from landlords that their property has been vacant for two months, four months or even longer. Ouch!

Big picture, if it’s taking you four months to fill a property (or after four months it’s still vacant), you need help.

What’s Your Problem?

You need to figure out your problem. Is your rent too high, is the property too ugly, did you pick a bad location or more commonly do you just have no idea how to market?

That last one seems to be the most common in my experience. Could it be your big problem?

If it is, I can probably help you.

But I’ll talk more about that in an coming post. For now, do soem of your math in preparation for the next post and we’ll do soem more landlord math again real soon!

Oh, one last thing. Could you leave me a comment and let me know the longest (or better yet the shortest) amount of time you’ve ever had a vacancy?

 

Why You Need To Talk To Your Tenants About Renter’s Insurance

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Renter’s Insurance – Why It’s Important

why tenants need renter's insuranceIronically it’s not just tenants that don’t understand renter’s insurance but it’s also landlords as well. Here’s why it’s important and here’s also what you need to know as a landlord.

Your insurance covers your property.

Or at least it should if you’re properly insured!

Depending on the type or amount of insurance this covers damage to the property through issues such as fire, flooding, sewer backups, rental income loss and more.

This helps you repair or rebuild your property if one of these issues does occur or provides you potential settlements if you prefer not to move forward with the work or if you wish to do it yourself.

Again the important point of this is it depends on the type of coverages you have. If you aren’t specifically covered for flooding for instance the insurance companies won’t cover you if there is flood damage.

If you don’t have coverage for loss of rental income, you won’t be covered for those losses, so it’s very important to ensure you’re properly insured to protect YOURSELF!

And that’s the important point, your insurance covers you, it doesn’t cover the tenants property and it also doesn’t cover the tenant if they are negligent and were the ones that potentially started a fire.

That is why it’s important the tenant themselves have renter’s insurance so they can cover the potential loss of their personal possessions.

Addressing Renter’s Insurance with Tenants

Now many landlords ask me “When or how do I talk to tenants about their insurance?”

Ideally this is done when you’re going through your lease with the tenant, but it can also be done as a courtesy during showings.

Many landlords make having renter’s insurance a term of the lease. This can be a great way to ensure they are adequately protected (as well as yourself) in case they do cause a problem such as a fire or significant damage due to negligence.

The challenge is depending on your local laws  you may not be able to enforce this, so as always learn your local laws and regulations!

I typically walk tenants through renter’s insurance during the lease signing by explaining to them how insurance works and the conversation typically goes like this.

” I just want to talk about insurance with you before we go any further. I have insurance on my property, but my insurance only covers my property. That includes the building itself, the appliances and everything attached or part of the property like doors, cupboards sheds and garages.”

“It doesn’t cover your belongings, your expensive stereo or TV, your computer, your clothes or any of your other possessions. That’s why you need your own renter’s insurance!”

It will cover any losses you might incur, it could cover any costs you might run into if you have to stay somewhere else if there was a fire or flooding and often it will even replace any goods or clothing you’ve lost.”

“And most important, it’s usually quite inexpensive for tenants as it doesn’t cover the building! Because of this I’d recommend acquiring your own insurance a priority right away.”

By this point the tenants usually understand how important it is, but it may still require following up once they have settled in. Just to make sure they actually do follow up!

What Tenants May Need From You To Get Renter’s Insurance

Depending on who the insurer is, often your tenant will now need you to answer some additional questions as well.

This can include the size of the space they are renting, the type of construction of the property, the type of heating, whether there are other attached units (ie up down suites, or whether it’s a condo/duplex) and possibly additional details.

To make providing this easier, you may want to include this information with any tenant packages you provide, and/or you may want to keep the information handy in your property files just for this type of occasion.

You’ve likely already been required to provide this to your own insurance company so it shouldn’t be hard to pull together.

Having an insurance conversation with your tenants can go a long ways towards avoiding a particularly unpleasant conversation if you ever do have major issues as well as pointing tenants towards a bit more peace of mind in their lives.

If you have some thoughts about tenant insurance and how you deal with it, leave me a comment below!