History of Indianapolis DOM Rates
Since Covid, the rental market in Central Indiana has been a little unpredictable. But, as we progress into 2024, that unpredictability is beginning to show some welcome signs of change.
For the first time in a few years, we had a great start to the New Year. So, maybe the long-standing credo of “The rental season begins in January” is back.
In the graph below, you can see the DOM averages for Indianapolis homes that were leased. In 2022, we saw DOM hovering right around the 30-day mark, and in 2023 it raised to a whopping 50 days.
In a time a great uncertainly in the real estate market, it’s hard to tell where DOM will go from here. Likely, DOM will decrease as we enter the Leasing Season, but that’s only if Landlords, who have enjoyed hefty rental increases for the past several years, recalibrate their expectations in 2024 and get more serious with their pricing decisions.
The 6 Major Factors that Affect Your Vacancy Rate
1. Condition
The condition of your property plays an important role in attracting Tenants and influencing vacancy rates. Neglecting necessary upgrades, ignoring maintenance issues, or delaying essential improvements can drive potential tenants away.
On the flip side, investing in upgrades, installing quality appliances, and maintaining an aesthetically pleasing environment can significantly reduce vacancy rates.
Remember, a well-maintained property not only attracts Tenants but also justifies a competitive rental rate.
2. Marketing
How you attract potential tenants has a large impact on how quickly you can lease your home.
Are you listing the property on websites that get a lot of traffic?
Are you utilizing social media or other posts to help find a qualified Tenant?
Are you including a lot of photos and details in your listings?
The more people who see your property, the more likely it will be rented quickly.
3. Location
Location is a key determinant of rental demand. Properties in central, bustling areas often command higher rents and rent more quickly. If your property is off the beaten path, focus on ensuring top-notch condition and offer a competitive rate to compensate for the location disadvantage.
In seasonal locations, be prepared to adjust lease terms, such as offering shorter leases during slow seasons, to fill vacancies effectively.
4. Time of Year
Understanding the seasonality of the leasing market is vital. In Indiana, leasing is particularly seasonal, with January to July being the busiest months. During peak seasons, you can expect lower DOM, but during slower months like August or December, consider adjusting your rate to attract potential Tenants.
Adapting your strategy to the ebb and flow of the market can optimize your property’s occupancy.
5. Lease Terms
Your lease terms can impact vacancy rates. While it’s essential to have lease terms aligned with your investment goals, overly strict guidelines may deter potential Tenants. If your terms are less flexible, compensate by investing in the quality of your property and offering a competitive rate.
Consider pet-friendly options and flexible lease durations to broaden your pool of potential tenants.
6. Price
Being a local expert in rental rates is crucial for staying competitive.
Keep a finger on the pulse of your local market and be prepared to adjust your rental rate based on demand and local trends.
If your property sits vacant for an extended period, consider offering a discount for the first month or adjusting the rate to align with current market conditions.
Flexibility in pricing can be a strategic move to attract tenants swiftly. And remember, you may end up with more money by reducing your rent rate. Vacancy is more expensive than a lower rate.
So, How Long Should It Take?
Like we mentioned in the introduction, the past 2 years have been fluctuating between 30-50+ DOM.
We predict 2024 will continue in this range, but have hopes for it to be on the lower end of the spectrum.
Leasing times fluctuate, but you can most likely expect 30-60 days of total vacancy in 2024. While some properties find Tenants within a day, others might take up to a few months. This is a good range to prepare a financial reserve for though, and we typically recommend up to 6 months of a reserve, just in case.
Is the Thought of the Leasing Process Stressing You Out?
You’re not alone! We meet many property owners who can typically handle the day to day problems of a landlord, but feel lost when vacancy hits.
If the leasing process feels overwhelming, but property management isn’t necessarily for you, consider T&H’s leasing-only option. We handle the intricacies, swiftly eliminating vacancies, allowing you to relax without the leasing stress. This option suits property owners managing a few properties who find the leasing process daunting.
In conclusion, predicting exact numbers for vacancy rates proves challenging due to various influencing factors. To increase your chances of securing tenants, stay informed about local market trends, offer a quality product, and employ effective marketing strategies for your investment property.
