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5 Ways To Minimize Vacancy Rates In Rental Properties

Are you a real estate investor experiencing higher-than-you-expected vacancy rates in your short or long term rental? 

Guess what; you're not alone. 

This is a big problem for many investors, especially investors just getting into the real estate game. High vacancy rates can have a massive effect on your profit margin and your overall success as an investor. In this post, we'll help you start investing in real estate by covering why high vacancy rates happen, why they kill the profit margin on an investment, and five things investors can do to lower vacancy rates.


What Causes High Vacancy Rates?

High vacancy rates are caused by a number of things - all of which we’ll cover below. But the root of the problem is usually the location, which is why it’s crucial that you do your research beforehand and select a property in a market with sufficient demand (more on that below).


Why Do High Vacancy Rates Kill Profit Margin?

Your rental income, which is the main source of cash flow for most real estate investors, is directly affected by your vacancy rate. A higher vacancy rate means fewer renters, which means less money from rent. This not only affects your cash flow, but it can also lead to proportionally higher costs like maintenance costs, property taxes, and mortgage payments, which eat into your profit margins.

Wear and tear will happen, but the true cost of addressing wear and tear (along with other maintenance) is significantly lowered when your vacancy rates are lower.


5 Ways To Minimize Vacancy Rates


Here are five things real estate investors can do to minimize vacancy rates and ensure that their investment properties remain profitable:


1. Offer Creative Incentives

A good way for landlords to attract potential tenants and lower vacancy rates is to creatively incentivize more people to rent. The rental market can be extremely competitive, so investors need to find ways to make their properties stand out.

happy tenants, which keeps landlord vacancy rates very low

Investors can attract potential tenants and get them to choose their property over others by giving them perks like discounts on rent, free utilities for a month, or waiving application fees. 

Also, incentives can help landlords and tenants get along better, which can lead to longer leases, lower turnover and ultimately a more profitable investment.


2. Do Your Due Diligence

The most effective way to keep vacancy rates down is to invest in the right market location. As a location booms, the laws of supply and demand work in your favor, and do wonders to driving down vacancy rates. 

For example, investing in a college town ensures that landlords always have a pool of possible student tenants. In a similar vein, young professionals may want to live near business districts or job centers. 

Investing in a neighborhood that is growing can also help make sure that the property's value goes up, which will make it an attractive investment for tenants. And attractive leases make for low vacancies.


3. Marketing, Marketing, Marketing

Utilize real estate marketing tools to get the word out about your rental. Part of marketing is also listing your property on sites like Zillow or AirBnb (whichever is applicable), so make sure you do a killer job with those listings.

Short term rental listed on AirBNB, an example of how marketing keeps vacancy rates low


4. Keep Your Property On The Up And Up

Keeping your property in good shape can make a big difference in how easy it is to find and keep renters. Maintenance and repairs should be done on a regular basis to keep the property in good shape. Picking a solid property management company is usually all the heavy lifting you as an investor need to do to make sure your property is taken care of.


5. Price Your Rental Competitively

The bottom line is that tenants want to pay as little as possible for as much quality as possible. So you as an investor need to know how to competitively price your rental to get the maximum rental income while providing the highest quality.

graphic showing a balance of value and price, which keeps rental property vacancy down


Avoiding high vacancy rates is something every real estate investor runs into at one point or another in their career. But following the above 5 steps, along with leveraging a powerful real estate lead generation software, is the perfect way to combat high vacancy rates and maximize return on your investment. 

And if you act now - you can get a 7-day free trial of Leadflow below to give it a test drive and see what it can do for you!