Risks of Having a Vacant Rental Property
Risks of Having a Vacant Rental Property
Are you looking to effectively manage vacant rental units and maximize your investment's potential? As a landlord, you know the challenges of investing in real estate.
Among these challenges is running a vacant unit. Vacant units represent missed opportunities for landlords to generate rental income and maximize their return on investment (ROI). It is important to know the risks associated with an empty rental property and how to prevent it.
First & Main Property Management is here to help you understand these risks and how to turn these vacancies into opportunities for rental success. We'll explore essential tips, strategies, and practical advice for landlords facing this challenge. Keep reading to find out more!
Loss of Rental Income
Having a vacant unit translates to lost rental income. Rental income is crucial for any investment property, providing landlords with a steady cash flow to cover mortgage payments, property taxes, maintenance costs, and other expenses associated with property ownership.
There are certain things you can do to protect your rental investment when it comes to vacancies.
- Build an emergency fund. Vacancies are common for landlords. With this understanding, you’ll want an emergency fund to help cover expenses if a vacancy arises.
- Conduct a comparative rental market analysis. Find out whether you’re charging the right rent. Overpricing a rental unit will only drive tenants away.
- Consider offering tenants some incentives. For instance, you can decide to ease your pet policy, make some upgrades, or even provide a prospect of reduced rent for the first month.
Vandalism, Theft & Property Damage
Vacant rental units are vulnerable to theft and property damage, posing significant risks and challenges for landlords. When a unit sits empty, it becomes a potential target for various forms of potential damage.
There are certain preventative measures you can take to prevent property damage and vandalism.
- Install a security system, such as motion sensor lights, alarm systems, and/or security cameras.
- Inspect the property regularly.
- Put up no trespassing signs around the property.
- Ask a neighbor to keep an eye on the property for you.
- Hire a property manager to help you find a qualified tenant.
Unauthorized Occupants
When a property stays vacant, it may also become vulnerable to occupation by unauthorized occupants.
Squatter laws usually make it difficult and stressful for landlords to carry out an eviction. Among other things, you may need to serve the squatter with an eviction notice, file an eviction lawsuit, and attend court hearings.
Depending on how long they have established residency, they may be able to own your property through adverse possession rights.
Follow the same preventative measures outlined in the previous step to avoid having unauthorized occupants.
Declining Property Value
A neighborhood with vacant properties is not ideal. The vacant properties can bring down the overall value of homes in the neighborhood.
This can make it difficult for property owners to sell their homes later or even limit how much equity they can build.
That’s why it’s important to invest in the right location. Researching a particular location before investing can help you avoid neighborhoods that are bad for rental investments.
However, if your property is an isolated area, the following are a few things you could do.
- Consider upgrading it to attract quality tenants.
- Conduct a comparative market analysis to price the property correctly.
- Maintain curb appeal.
How Can a Property Management Company Help?
With all that in mind, you may want to seek the help of a qualified property management company when dealing with vacancies.
The following are some benefits of working with a qualified and experienced property manager.
Tenant Screening
A property manager knows how important conducting a tenant screening is. They will conduct thorough screening checks to ensure you find a quality tenant who will pay rent on time, care for your property, and follow the lease agreement.
The screening process includes verifying the prospect's income, employment history, and rental background.
Property Maintenance
Rental maintenance is key to attracting great tenants and maintaining property value. A property manager will conduct routine, seasonal, and emergency maintenance to ensure your property stays in good shape at all times.
They will also coordinate with qualified contractors or in-house
maintenance teams to address problems promptly.
Rental Pricing
Knowing how to price your rental property is important to running a successful rental investment.
A property manager can help price your property competitively for higher ROI. They will usually conduct a comparative market analysis to ensure your property is neither overpriced or underpriced.
Conclusion
A vacant property is bad for your investment’s bottom line. By following the steps outlined in this guide landlords can significantly reduce the risk of having vacant units.
Hiring a property manager is a strategic investment for landlords looking to avoid vacant units and maximize rental income. Property managers bring expertise in tenant retention, effective marketing strategies, and proactive maintenance management, all of which are essential in minimizing vacancy periods.
If you’d like to hire a qualified and experienced property manager, look no further than
First & Main Property Management. Get in touch to learn more!
