T&H Realty Services Blog

Vacancies present quite a challenge to Real Estate investors.

And in spite of your best efforts, vacancy is inevitable. No matter how good of a Landlord you are, Tenants are eventually going to move. And when they do, it's critical to minimize that vacancy as much as possible.

Tenant turnover is a big expense for many Landlords in the first place. And if you can't get the property re-rented in a reasonable amount of time, lost rents, cleaning costs, maintenance and advertising will compound the Vacancy Effect.  

In a previous blog we discussed ways to increase Tenant retention, and today we are going to share some ways you can reduce down time between Tenants.

When you think about rental property expenses, things like maintenance, management fees and mortgages are probably what come to mind.

But there’s one item you may not find when Googling typical costs associated with owning rental real estate.

Vacancy.

Now, you can argue that vacancy isn’t an expense per se. It doesn’t show up as a line item on your Profit & Loss statement, but it does have an impact on your income, and is what we’ve called time and time again a “cash flow killer.”

We always advise our Central Indiana Investors to consider vacancy as an associated cost of owning a rental property and to budget accordingly. A general rule of thumb is to expect your property to be vacant for at least one month out of the year or, at a minimum, 8%. Most industry experts will argue that 10% is a better number.

Fortunately, vacancy is currently at a cyclical low nationally, and Indianapolis is set to see a vacancy rate of 6.9%, which is down 70 basis points from 2016 according to homeunion.com.

Even though single family home vacancy rates are on the decline, it’s critical to be prepared for when your property sits vacant longer than you anticipated.

After suffering through its worst quarter in four years, the Central Indiana rental market saw a huge rebound during this year's first quarter.

In spite of a less than stellar January, where frigid temperatures kept a lot of people indoors instead of out looking for rental homes, first quarter numbers were eerily similar to quarter one of 2017. 

Fair Housing laws are right up there with property taxes and insurance when it comes to level of excitement for Landlords.

You may feel the Fair Housing Act is fairly straightforward and common sense, and you would never knowingly discriminate anyone from renting your property.

So, why is it such a big deal? Why even spend the time reading a blog about it?

We’ll tell you why.

Lawsuits, lawsuits and more lawsuits.

You would probably be shocked to know how many Landlords and Property Managers have been sued over housing discrimination issues due to ignorance of the law and what all it entails.

Violating Fair Housing guidelines isn’t as cut and dry as refusing to rent to someone because of the color of their skin.

There are numerous caveats and subtleties that you should be aware of to avoid an embarrassing and costly lawsuit.

So, in honor of National Fair Housing Month, we thought we would spend some time breaking down the Fair Housing Act so that you don’t make any of these avoidable mistakes.

If you are a rental property Owner at this point in time, you are part of a monumental shift in the market.

Between younger generations preferring renting to buying, along with the lingering ramifications of the housing crash, we’re seeing the strongest stretch of rental growth since the 1980s.

What may be a Renter’s worst nightmare is a Landlord’s dream come true.

Rising demand for units + low inventory = Increased rent rates.

According to CNBC, rents are at the top of the list for fastest rising consumer prices and there’s no sign of this trend slowing down.

If you subscribe to this blog, you know that rents in Indianapolis are definitely on the rise as well. 

You may have some reservations about raising your rental prices. You might be worried that raising rents will increase vacancy or scare off good tenants, or maybe you just really hate confrontation. These are legitimate concerns that deserve further discussion. 

You have to keep in mind that while your property is someone’s home, it’s also a business and an income generating investment and you need to treat it accordingly. 

While you may not be able to raise rent every year for the rest of your investment career, for the time being, we're in an environment that's certainly conducive to increasing rent rates. 

We’ve said it before and we’ll say it again: When you buy rental real estate, you’re entering into a small business.

As with all businesses, large or small, customer service should always be a major priority. After all, it’s easier and cheaper to retain customers than it is to find new ones.

As a Landlord, this holds true for you, too.

Maybe even more so than many other industries.

Effective Property Management is a critical component of any successful buy and hold strategy. If your Tenants renew, you save a TON of time, energy and money.

To maximize your investment, you should strive to retain good Tenants and avoid vacancy, which, as we’ve noted before, is a cash flow killer.

Arguably, one of the best ways to keep your Tenants happy is to practice good maintenance processes.