Property owners did you know that there are slow times of the year in the rental market? Rental properties can suffer from similar factors that affect the real estate sales market. Leases that end during these slow times can take longer to rent out. They are also more likely to be discounted to encourage a rapid rental.
Seasonally Slow Rental Times
Here are the times in North Carolina when it is a bit more difficult to rent out a vacant unit:
January – February. It’s cold. It’s wet. It’s a pain to move in the winter. So most tenants don’t. In addition, they just spent every extra dollar they have on gifts for their friends and family. Who has money left over for a security deposit?
September. If you are a parent, would you want to move right after your children started a new school year? Never. If given the option, parents will almost always choose to move during the summer months so they are settled before school starts.
December. Nobody really wants to move during Christmas right? They have a lot of other things on their minds. During this month, the people seeking a quality rental are almost non-existent.
How Does Victory Property Management Handle Slow Rental Times?
It all comes down to pre-planning.
If we receive a rental that has a lease that expires anytime during these “dead” zones, we will do everything legally possible to either encourage the tenant to stay longer or to break their lease earlier.
We do not write leases that expire on December 31st, even if that means that we have to pass on the renter. We would rather wait another week to find a good tenant that agrees to our lease terms rather than have a lease that expires during a slow period and it takes 2 months to re-lease it. In the end, it will save our property owners hundreds or thousands of dollars in lost rent. We follow a similar plan for other slow times as well opting to juggle lease lengths around to avoid these periods at all costs In the vast majority of cases tenants do not mind one bit and after we explain our reasoning often appreciate the change. This method also often allows us to get 14 – 16 month leases with little push back from tenants, which dramatically reduces turnover, and therefore cost to our landlord customers.
If a tenant does move out during these slow periods (usually because we inherited them), we are slower to reduce the rent to fill the unit. It is better to wait a little longer to find a full priced tenant as often reductions in slow periods still don’t work well, and you often end up with lower rates as well as longer vacancy. We are willing to accept a little more vacancy if it pushes us closer to the higher traffic periods, and allows us a larger selection of top notch tenants. Of course every owner is different, and your input is important, but this is our advice in most instances.
In the end, our property owners will have much higher net income by following our method. For example, suppose a house is listed for $1,200 per month and came available January 1st. The first two weeks in January are utterly dead. We hardly get any calls at all. To attempt to find a tenant during that time, we could discount the monthly rent down to $1,000, but over a 12 month lease this will cost the landlord $2,400. We could offer a one month 50% discount which would cost the landlord $600 and may not help at all (in general we are against promotions of that sort). Or we could hold on a bit longer and get the standard market rate or close to it. While our goal is to fill our units as quickly as possible, we try very hard to not sacrifice a property owner’s cash flow to accomplish it.
While we have a solid method for handling these lease timing issues, our real value comes in our ability to make sure we don’t end up with a move out at those times. We are excellent at this, and it leads to a huge increase in net income for our owners. We reduce the risk of long vacant homes, increase rates, decrease vacancy, and often secure longer terms. In property management small improvements in such a wide range of metrics adds up to a huge benefit.
Victory Real Estate is committed to working in behalf of our property owners. We know our market. We know our renters and we will do everything possible to time our leases to maximize both.
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