Most real estate investors prefer real estate because so many aspects of the investment are directly manageable. Compared to many other investments, real estate provides a much greater level of control. There is one part of rental real estate investing that is outside of the investors control. Unfortunately, it is common to experience a decline in off-season rental applications for your vacancies.
In the off-season, should you just accept that the market is slow? Or, is there something you can do?
What Is Off-Season?
Off-season is defined as:
- The holiday season that falls at the end of the year
- In vacation locations it is the period when tourists are not as likely to visit
- Locations where weather becomes extreme and people are not as likely to want to move.
Many landlords actively try to avoid vacancies during these periods. If your rental is located in an area where the off-season period is particularly problematic, you might not allow any leases to end prior or during one of these periods. Unfortunately, things happen that cause properties to become vacant at bad times. The challenge is how to increase rental applications, and attract a tenant, from a much smaller pool of potential applicants?
The Holiday Season
The time of year that affects all American landlords is the last six weeks of the year which is also known as the holiday season. By this time of year potential tenants have either:
- Found a home.
- Are in a major rush to find one.
- Have postponed looking until after the start of the next year.
A few years ago, a particularly creative rental owner had an unexpected vacancy on December 10. With a good cleaning, the home could be occupied quickly. The owner wanted us to come up with an offer that would attract a tenant before the end of the year. Our leasing team brainstormed a list of options that we believed would encourage prospective tenants to urgently complete rental applications and not wait until after the holidays. We discussed this list with the owner and decided to advertise using a couple of these ideas.
Our Off-Season Rental Application Promotion List
Early Move In
Move in before the Christmas holiday and start paying rent in the new year! Sounds great because one of the biggest hurdles for people is they just do not like to go through moving during the end of year holidays. By offering an early move-in we might make it easier for a tenant to transition from one residence to another.
Security deposit Installment Plan
Some would argue this is a little risky but the appeal is in the marketing. We allowed the tenant to pay half the security deposit at move in and the balance on February 1. This helped at a time when many folks are a little light on their reserves. The risk is pretty small and the offer mitigates another problem why tenants delay moves this time of year.
In the case of this particular vacancy these two strategies combined worked! The home was occupied by January 1 and the actual cost to the owner was minimal!
Our list contained some other ideas that I have shared with owners and have found to also be successful. These offers can stand alone or be combined with a different offer…they are programs to test and see based on the property.
Reduce the security deposit
Risky but remember you still must approve the tenants. You can make this offer and still not approve a tenant who it appears could take advantage of the offer.
Make this offer for any period of time. Most landlords limit the offer to a month and most want to make it the last month of the lease. These are totally logical practices BUT if we are trying to attract a tenant remember we live in a NOW world. And an initial waiver of rent will be much more appealing to a prospective tenant.
Reduced rental rates
What if a tenant has a lower amount of rent initially? A plan to offer 25% off for three months might cost 75% of one months rent, but will it speed up occupancy by 22 days or more? If so, you are ahead! Tenants see the reduced rent and act!
Flexible payment options
Pay weekly, twice a month, what helps the tenant? It might not fit perfectly in the owner’s cash flow model but it might be very appealing to some tenants.
Rental Applications or Vacancy?
These are not way out-of-the-box ideas. When you consider them against the cost of a vacancy, they are not expensive. They do address some of the objections that limit potential tenants from making rental applications during the off-season. These offers also don’t have to be saved just for the holidays. They can work any time.
I would rather attract an acceptable applicant with one of these offers (or two or three) than simply lower standards to bring in a body. The cost of the concessions is much less than an eviction! Frankly, in the worst case, a vacant home during the off-season is much less costly than an eviction.