Have you ever thought about the paradox of leasing? We all want a fast rental for our vacant units. A fast rental means the money machine is rolling and cash is being produced. Yet, just flipping on the money machine for the sake of turning it on may actually end up very costly.
Sure, the rental unit that sits vacant is losing money. But, a vacancy is just one way a rental loses money. If you are too aggressive in avoiding a vacancy, you might just fall into one of these other, more expensive, traps.
Low Pricing May Lead To Losses
If your rental unit leases in 3 days that is a great thing, right? Maybe, but you may have left money on the table. A super-fast rental may point to a below market rent rate. Maybe that was your strategy. The rental unit is a business. Did you price below market so much that the lost rental revenue exceeded the vacancy time a market priced rent would have produced?
The problem is finding the market rate with an optimal on-market period of time. This is where professional management can help Their advice comes with knowledge of the market and the ability to minimize losses due to under (or over) priced rental rates.
Avoiding Having The Unit Show It’s Best
Some owners want their rental unit on the market despite the way it may show. A dirty rental will only attract people who are dirty themselves. People who are willing to accept a leaking kitchen sink and a bucket that has to be emptied regularly, will likely assume that most maintenance does not need to be reported. This lack of attention leads to a cycle that will end up costing the owner significantly.
A poor showing unit may lead to a tenant that will end up costing so much more than the longer vacancy period.
Poor screening leads to bad tenants
The most common reason rental owners lose money is due to bad tenants. In over two decades of being in the leasing and management business, the single biggest problem in portfolios we have taken over is poor tenants. There is usually a direct correlation to an owner who was pleased when the former management leased their unit in just a few days time. At the time, it seemed wonderful that the first month rent and security deposit was received. That is usually all it takes to satisfy most anxious owners. Unfortunately, the super fast rental should have led to concern.
Poor screening of applicants leads to tenants who should not have ever been approved under normal objective standards. In an effort to please a demanding owner, or just poor management practices, a fast rental occurs. The “professional tenant” market knows what management companies maintain low standards. Subsequently, these management companies or owners end up with large unpaid rents, and the ensuing costs of eviction.
Skipping Steps In The Documentation Process
One final item that is common with a fast rental. The professional tenants are very familiar with why it is crucial to pay fast and move in quickly. The landlord is more likely to fail to get a piece of documentation or a lease will not be fully executed. Without these items, the professional tenant has the tools to fight in court and get incredible lengths of time granted for additional free-living. Yes, it happens. Talk to any eviction attorney.
I have found in situations where a tenant needs to move in quickly, they often disappear when it is clear we have process and procedures that must be followed. Little requirements like we will not let them move in until we have scanned their photo identification often scare off the professional tenants. We absolutely will not allow move in until all verifications are completed.
The Main Goal Still Is To Rent Units Quickly!
We agree how important it is to rent a unit quickly. As an owner, consider your requests for a fast rental against the corresponding consideration of the above issues. The best landlords have concern for their tenants and are seeking a mutually beneficial business arrangement.
If your goal is simply to collect that first month rent from anyone who has some cash then you may prioritize a fast rental. Or if you plan that you can always evict in month or two, then quick renting may be your objective. It is my opinion that this business model is not going to produce long-term success. There are problems for landlords who take a tenant’s money with a plan to evict in a short period. Eviction judges recognize this business model and are treating these landlords harsher including giving the tenant lots of extra time to live for free in the rental. A fast rental strategy will eventually backfire on you.
Our recommendation is to make sure the reason your units rent is because these concepts have been addressed with a longer term perspective. A successful rental business depends on solid, long-term, tenants.