The ideal situation for any property investor is to keep their property(ies) filled with good, long-term tenants. In case you missed it, we outlined some good ways of doing this here. However, at times, this simply isn’t plausible, especially if your tenants are relocating or they need somewhere bigger / smaller to live.
If your tenants are planning to leave, or are likely to leave in the next few months, there are two key things to remember:
1. Keep your turnaround short.
A good relationship with your tenants should mean that you have some advance notice of their plans. If so, spring into action immediately:
A. Determine what repairs and renovations will be needed (if any) and get these plans in order. A good relationship with your departing tenants may pay off here: would they be willing to let you assess or even start work on the property before they leave?
B. If you work with an agent, ask them to start mentioning the property to prospective tenants immediately, even if it may not be available for some time. The properties that they are currently considering may fall through, or they may well know other people moving into the same area in a few weeks’ time.
C. If you work independently, start advertising as soon as you can. It’s also worth speaking to your departing tenants – they will likely be able to recommend your property to their friends and contacts, and they are likely to look after your property in a similar manner. It may even be worth offering a cash incentive!
When it comes to tenant turnarounds, time is money … so keep it short!
2. Think about your price.
It’s difficult to let something go cheaply, especially if it’s worth a lot. But remember: every month without rent is 8.3% of your annual revenue lost.
In other words, you’re better off dropping the rent by 5% if it helps to find a 12-month tenant one-month quicker. Or by 10% if it saves you a two-month wait. There is always demand for property – in any neighbourhood – as long as it’s priced competitively. Find the right figure, and you should be sought after.
Of course, rent can’t always go down, or even remain the same – it sometimes needs to go up. At Open Door, we understand more than anyone the importance of meeting market demand so our next blog will offer advice on increasing rent and, more importantly, how to present this to your tenants.