If you are looking at holding rental properties over the long-term as a tool for wealth building, than you need to develop your landlording skills properly if you expect to last for any length of time in this business. There are certain priorities you need to focus on and master, the first of which is how to fill vacancies quickly. A vacant rental unit means several things: lost income, a drain on your wallet (you're paying for it, the utilities, etc while getting no income from it) and lost time as you have to maintain the unit until it you fill it again. So how should a real estate heavyweight handle this situation?
First of all, you as a landlord need to encourage advance notification. To do this you need remember a basic principle of landlording: You should look for ways you can make your resident feel like a winner whenever you want them to help you reach your objectives. Say you want to make sure you get a 60 day notice before they move out. Now when a tenant moves out, they mostly just want to get their security deposit back, right? Well, you can tell them that you want to help them get back ALL of their deposit, if they are able to help you rent the property to another resident by the current resident's move-out date.
If you have had a good on-going relationship with the resident up to that point, you shouldn't have a problem with getting them to give you the 60 day notice, especially if you also do the same to them if you need to make contract changes. Having that 60 days instead of 30 will be a great help in getting a vacancy filled.
Of course, having advance notification is helpful only if you have the cooperation of your current tenant. What good is showing the property ahead of time if the tenant doesn't have the property picked up or, worse, tries to influence potential new tenants in a negative way?
To build on the principle above, if you want residents to do something, give them an incentive to do so. tell your current tenant that if you approve a qualified new renter before the last day of occupancy, you'll give them a $50 moving bonus on top of whatever deposit is due. It would be very rare that you need to offer more than that. You'd be surprised the amount of cooperation you can get for just $50!
One thing a lot of investors will do is wait until the unit is about to be empty before advertising it available for rent. Big mistake! Not only should you be advertising as soon as you get the notice from the current tenant, you should always be advertising, even when all your properties are rented. With so many free ways to advertise, especially online with Craigslist and similar sites, why not build up a renter's list like many investors build up a buyers list for houses? What you'll find is that most qualified residents do not mind being put on a "priority" waiting list for when a certain home or similar property becomes available.
These are only a handful of the landlording skills you should learn and put into practice. Being a landlord is something you are never done learning how to do. The most successful landlords in this business, the real estate heavyweights, never stop acquiring new skills and knowledge.
This article is based a chapter of book Be a Real Estate Heavyweight, entitled Landlording for Long-Term Wealth With Rental Properties by Tim Taylor. For more information on the book, be sure to check out www.RealEstateHeavyweight.com.
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