Below is First Rate Property Management’s vacancy graph. Let me explain what we count as vacant. If the property is vacant, but the tenant is paying rent, we count it as vacant. If the property is vacant and we have executed a lease and the new tenant just hasn’t moved in yet, we count it as vacant. As you can see, our vacancy spiked an entire percent in the last week. That is because most tenants vacate at the end of the month. I suspect that next week will fall back down to the 4% level.
(Click to enlarge)
With the rental market improving, First Rate Property Management has had to make some changes in our policies and procedures. For most of the last decade, it has mostly been a renter’s market and our staff has made the appropriate adjustments. With the rental market now improving, we are now making adjustments that more favor the Landlord. Below are some examples of some of these changes.
Move-in dates: If the property was available on the 1st and the tenant couldn’t move in until the 21st, we mostly accommodated them and started the lease on the 21st, which means that the owner lost 3 weeks of rent. We have to allow some time for a proper turnover, but regardless of when the tenant wants to move-in, we will be requiring them to start paying rent sooner.
Move-in incentives: Incentives are not offered as quickly or for as much as we have in the past, with some exceptions based on trend analysis. However, we are putting controls on this. For easy math, let’s just say that the tenant is to receive a $300 move-in credit. We are now applying this $300 move-in-credit from the time the tenant is approved or when the property is ready to be occupied; where in the past, we applied it to the date they wanted to move in. So if you couple the flexibility we offered on move-in dates plus a move-in incentive that didn’t apply until after the move-in date, the owner was losing many rent days.
Renewals: Our lease has an automatic rent increase built in it. For the past few years, we have waived the increase and used it as an incentive or as good will, to get the tenant to stay and renew. We are now back to reviewing all upcoming leases and invoking the automatic rent increase to those paying under market rent.
In summary, I think these changes will improve our client’s bottom lines and I also think it will entice tenants to move-in sooner.
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