What To Do When Rental Property Sits Vacant Too Long
As a beginner real estate investor, a vacant rental property can quickly turn a dream into a financial headache. While some vacancy is expected, a property that sits empty for an extended period means lost rental income and ongoing expenses like mortgage payments, taxes, and insurance. The national average vacancy rate for rental properties was 6.4% in Q4 2023 according to the U.S. Census Bureau. If your property’s vacancy is significantly higher than this, it’s time to take action.
1. Re-Evaluate Your Rent Price
One of the most common reasons for prolonged vacancy is an overpriced rental. Before anything else, compare your asking rent to similar properties in your neighborhood. Look at recent leases for properties with the same number of bedrooms, bathrooms, and comparable amenities. Websites like Zillow, Trulia, and Rent.com are excellent resources for this. If your price is too high, lowering it slightly can often be the fastest way to attract a tenant. A small reduction in rent is better than an extra month of no income.
2. Boost Your Marketing Efforts
Are you reaching a wide enough audience? Consider the following:
- High-Quality Photos: Professional-looking photos make a huge difference. Good lighting, clean spaces, and multiple angles are crucial. Avoid blurry or dark images. Data suggests that listings with more photos and higher quality images get more views and inquiries.
- Compelling Description: Highlight the best features of your property and the neighborhood. Mention nearby parks, good schools, public transport, or popular amenities.
- Online Listing Platforms: Don’t just rely on one. List your property on major sites like Zillow, Trulia, Apartments.com, Facebook Marketplace, and local real estate groups.
- For-Rent Signage: A physical sign in front of the property can still generate local interest, especially in high-traffic areas.
3. Improve Your Property’s Appeal
First impressions matter. Consider what small improvements could make a big difference without breaking the bank:
- Curb Appeal: Tidy up the landscaping, trim bushes, and add fresh mulch. A clean exterior invites potential tenants in.
- Deep Clean: A sparkling clean property gives a sense of being well-maintained. Hire professional cleaners if necessary.
- Minor Repairs: Fix leaky faucets, running toilets, squeaky doors, or any obvious wear and tear. Small imperfections can accumulate and deter applicants.
- Fresh Paint: A fresh coat of neutral paint can brighten up a space and make it feel new and inviting.
- Professional Staging (Optional but Helpful): For vacant properties, even minimal staging with a few key pieces of furniture can help potential tenants visualize living in the space.
4. Rethink Your Tenant Screening Criteria
While robust tenant screening is essential, overly strict criteria can limit your applicant pool. Review your requirements for credit scores, income-to-rent ratios, and previous landlord references. Are they reasonable for your market? For example, requiring a 750+ credit score in an area where the average is 650 might be too restrictive. Be flexible where you can, while still ensuring you’re getting a responsible tenant.
5. Offer Incentives
Sometimes a small incentive can tip the scales. Consider:
- One Month Free Rent: This is a popular incentive that effectively lowers the first year’s cost for the tenant without lowering your advertised monthly rent.
- Reduced Security Deposit: Be cautious with this, but a slightly lower deposit can be attractive, especially if the standard deposit is very high.
- Pet-Friendly Policy: If your property allows pets, clearly advertise it. Data from the American Pet Products Association shows approximately 85 million U.S. families own a pet, significantly expanding your potential tenant pool.
6. Consider a Property Management Company
If you’re overwhelmed or just not getting results, a good property management company can be invaluable. They handle marketing, showings, tenant screening, lease agreements, and maintenance. While they charge a fee (typically 8-12% of collected rent), their expertise can significantly reduce vacancy times and stress, ultimately saving you money in the long run.
FAQs
- How long is too long for a rental property to be vacant? Generally, if your property is vacant for more than 30-45 days, it’s starting to be considered too long. The national average vacancy rate should be a benchmark, and anything significantly above that for your specific market indicates an issue.
- Should I lower the rent immediately if my property is vacant? It’s one of the first things to consider after ensuring your marketing is strong. Do a thorough market analysis first to determine the competitive rent. If you’re significantly above market, a reduction is often the quickest solution.
- What are the hidden costs of a vacant property? Beyond lost rental income, you still pay for the mortgage, property taxes, insurance, utilities (often higher when empty), landscaping, and potential squatters or vandalism risks.
- Can I deduct vacancy costs on my taxes? Yes, typically you can deduct expenses incurred while the property is vacant and actively being marketed for rent, such as utilities, mortgage interest, property taxes, and advertising costs. Consult a tax professional for specific advice.
- Is it better to lower rent or offer incentives? It depends on your market and strategy. Lowering rent directly impacts your cash flow. Incentives (like one month free) can attract tenants without permanently setting a lower rental price, but still reduce your overall take-home for the year.
- How can I make my property pet-friendly without too much risk? Implement a clear pet policy that outlines size/breed restrictions, require a pet deposit or pet rent, and consider adding durable flooring where possible. Thorough tenant screening is key for pet owners as well.
- When should I consider selling the property instead of continuing to rent it? If you’ve tried all avenues, and the property continues to be a financial drain due to high vacancy, significant ongoing repair costs, or a declining local rental market, it might be time to reassess your investment strategy and consider selling.
Bottom Line
A vacant rental property is a drain on your finances. By proactively addressing potential issues like pricing, marketing, property appeal, and tenant screening, you can significantly reduce vacancy times. Don’t be afraid to adjust your strategy or seek professional help from a property manager. The goal is to minimize downtime and maximize your return on investment.