Empty real estate reality
There is no investment in the world as profitable as real estate. However, there is no asset more expensive than an empty property. A property does not take long to necessitate sale or foreclosure when it has a substantial and consistent negative cash flow. That is the reality of empty properties. The best way to prevent this possible failure is to simply keep the rental units. This is doubly true for smaller properties, as one unit down can easily mean 25% loss of revenue for a 4-plex, 33% for a triplex, and 50% reduction in revenue by a duplex.
Tactic
Many landlords only do the bare minimum to rent vacant space. They put up a “For Sale” sign in the yard, and maybe they put an ad in the classifieds. They spend as little money as possible in an effort to complete the rental. I guess the thought is, “I’m already losing money in this place, why spend more and make it worse?”
If your market is so strong that you can rent empty units within a week or so just by putting up a sign on the lawn, great. For the other 99% of you, read on.
The tactic that seems to work best for filling empty units is the time-honored practice of bribery. Here are some ideas for you to think about.
* Bribe your current tenants. Hopefully you send the tenant a letter with a rent statement every month, if not just send a special tenant letter offering them a new TV, $ 100 off next month’s rent, or money in Cash if you are referred to someone who signs a lease.
* Fragment of potential tenants. You can offer them a DVD player, a free month’s rent, or maybe a reduced rent for the first 6 months, maybe $ 25 off. State the offer in your newspaper ad. Don’t be afraid to pay a little more for a longer or bold ad if it means you will rent faster. You can also include the bribe in a letter to the tenant. (Example: “Tell your friends we are making a deal. If someone signs a lease by the end of this month, they will receive a $ 50 gift certificate for TGI Friday’s.”)
* Bribe local employers. Offer nearby businesses a $ 100 referral fee for pointing employees in your direction.
* Bribe the community. Many libraries, supermarkets, and community centers have public notice boards where it is appropriate to post things like this. Just check first to make sure it’s okay to put that notice there.
Be creative. If you can offer them something that other owners don’t want, then you will have the competitive edge in your market.
The bottom line
Yes, this is an additional cost. However, it is worth doing. If you spend $ 50, $ 100, or even $ 200 to fill your apartment, you’ll get your cash flow back much faster. The costs of an empty apartment add up quickly. A $ 500 apartment vacated for 3 months only cost him $ 1,500. If you had spent $ 300 on a new TV and a classified ad and filled it out in a week or two, at the end of those same three months, you’d get $ 1,200 net. $ 1,200 in profit instead of a loss of $ 1,500. Not bad for a 3 minute phone call to the newspaper and a 20 minute drive to the electronics store.