In a perfect world, your rental property would be rented out 12 months a year. But unfortunately, that’s not always the case. You might have a vacancy for a few months after a tenant moves out or when you buy a new property.
On today’s show, I’m sharing my six best tips for dealing with vacancies in your rental properties. We’ll cover exactly what a vacancy is and what to expect as a landlord. We’ll discuss setting realistic expectations, plus strategies for ensuring your property gets filled with a great tenant. I hope you enjoy this episode of Investing in Real Estate!
Six Things You Should Know About Vacancies
- Vacancies are normal. Any business is going to have its downfalls, and this is just one of them. If you owned a grocery store, you would expect to occasionally have issues like loss of inventory, equipment breaking, or unhappy customers. I want you to think of vacancies as a normal part of your business. Don’t panic, it happens to every real estate investor out there. I get it, the nerves and the panic are to be expected if you’re a new investor. But remember, you’re not the only investor who has gone through this, and it’s going to be okay.
- Patience is key. If you’re in the midst of a vacancy, I understand that you want to get a tenant in your rental property ASAP. But let me remind you, you’re not seeking out just any tenant, you want the_ right_ tenant. Your goal is to rent your property to a high-quality, respectful, reliable, long-term tenant. You don’t want someone to move in who is going to trash your place, pay rent late, or ultimately move out soon after. It might take a while to find the right fit.
- Trust your property management team… but don’t be afraid to check in with them either. If you did your due diligence in hiring the right property management team, then you should trust them to fill this vacancy. It benefits the property management company to keep your investment rented because when you’re collecting rent, they’re taking a cut of the profit, right? They want to see your property rented just as much as you do. Check in occasionally with a quick email or phone call, but don’t nag them on a daily basis. And if you are a Morris Invest client please connect with our customer service team – that is what they are there for! Often, you can get an answer quicker from us than you might going directly to the property management company.
- Be prepared. Since this is an inevitable part of the business, do yourself a favor and prepare for it to happen. Add this expense into your ROI formula. We recommend having 4-6 months of reserves available to protect yourself.
- Be realistic. Real estate investing is a powerful way to build wealth, but it’s not some magical, perfect process. Nothing rewarding in life is without hurdles. Think about parenting: it’s one of the best things in life, but there are plenty of hard decisions and moments too. When you expect perfection, you’re just setting yourself up for disappointment. Being a part of the solution is powerful when you are running a business, and having realistic expectations is the first step in that solution.
- Think long-term. Remember that every single successful investor you know has had a vacancy. I know I’ve had my fair share of vacancies. Do you think Robert Kiyosaki or Robert Shemin have ever had a vacancy? I can tell you with certainty, yes! They’ve had more vacancies than you could probably fathom at this point. So imagine in the future, you have 50 rental properties… would you be concerned with one vacancy? Heck no! I know a vacancy might seem like an emergency right now, but as you grow your portfolio, it’s going to feel like less of a big deal.
Your job is to nurture your portfolio now, so it can take care of you in the future. I know that a vacancy can be intimidating if you’re relying on it to pay off a loan, but if you keep your long-term goals in mind, eventually that mortgage will be paid off and you’ll be closer to reaching your Freedom Number.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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