What is vacancy rate?
The vacancy rate is the percentage of unoccupied units in a particular rental complex at a given time. For example, let’s assume that you have a rental complex with 100 units and currently 85 units are occupied by tenants.
In this example, 15 units are vacant(they are not occupied by a tenant). So, what is our vacancy rate?
To calculate the vacancy rate, we will use the following formula.
Vacancy rate formula
Plugging numbers in the above formula will result in the following percentage.
From our example, we can see that 15% (15 units) out of 100 units are vacant. The vacancy rate changes over time as tenants move in and out of the rental units.
How to use the vacancy rate?
The vacancy rate is very important as it shows how well a property is performing. A low vacancy rate means that the property is doing well. As the rate increases, the landlord will make less money on the property until it is no longer profitable.
Investors use the vacancy rate to understand how well a property performs compared to surrounding properties. For example, if your apartment performs poorly compared to other apartments in your neighborhood; investors will not give you top dollar.
How to reduce your vacant rate?
Since the vacancy rate shows the performance of a property, each landlord should do whatever it takes to reduce this rate. There are two reasons why your rate is high: (1) you never get enough tenants or (2) you cannot retain your tenants.
To solve these two problems, you must re-evaluate your management, services, and marketing strategies.
The following are some of the tips you can use to reduce your vacancy rate.
- Improve your customer service: Customer service is the first thing you must work on if you want to get and retain tenants. Why would someone stay in your complex if you do not respect them? Your tenants are your customers, and therefore, they should receive the uttermost respect.
- Renovate your units before a tenant moves in: Yes, tenants are very picky and hate houses that are not renovated. No tenant will pay you thousands of dollars on a house that is falling apart. Make sure that the unit is fully renovated before you advertise it.
- All maintenance activities should be done on time: Being a landlord is like being a made to your tenants. This is true and the faster you get it the more successful you will become. Tenants do not have a schedule or respect for time. They will not be afraid to call you in the middle of the night for a stove that is not working. You must respond to all calls and solve all their problems in a timely manner. An immediate solution is always a winning one.
- Keep your apartment complex clean: This goes with professionally cleaning the apartment after every tenant moves out, cleaning the common area, emptying trashes, dumpsters on time, etc.
- Know how to screen your tenants: Yes, you must have proper screening techniques. If a tenant does not look good on a paper and during the interview, he/she will not look good in your unit.
- Advertise your units: The more people you reach during your advertisement, the higher the chances you will attract good tenants. Put it on every social media besides other marketing techniques you already use.
- Provide more amenities: If you have a big apartment complex, at least there should be a pool and a gym. Having other amenities such as a pets’ park, basketball and volleyball courts, etc. will increase the retention of your tenants.
