Filling Your Apartments

Reality of empty Real Estate

There is no investment in the world as consistently profitable as real estate. However, there is no asset more expensive than empty real estate. It does not long take for a property to make sale or foreclosure necessary when it has consistent substantial negative cash flow. That is the reality of empty real estate. The best way to prevent this possible failure is simply to keep units rented. This is doubly true for smaller properties, as one unit down can easily mean the loss of 25% of income for a 4-plex, 33% for a triplex and 50% reduction of income on a duplex.

Tactics

Many landlords only do the bare minimum to rent empty space. They put a “For Sale” sign up in the yard, and maybe they put an ad in the classifieds. They spend as little money as possible in effort to get the tenancy filled up. I suppose the thought is, “I’m already losing money on this place, why spend more and make it worse?” If your market is so strong that you can rent empty units within a week or so just by putting up a sign on the lawn, great. For the other 99% of you, keep reading. The tactic which seems to work best to fill empty units is the time honored practice of bribery. Here are some ideas to get you thinking.

* Bribe your current tenants. Hopefully, you send them a tenant letter with a rent statement every month, if not just send a special tenant letter offering them A new TV, $100 off next month’s rent, or cash if they refer someone to you that signs a lease.
* Bribe prospective tenants. You can offer them a DVD Player, one month rent free, or perhaps reduced rent for the first 6 months, maybe $25 off. State the offer in your newspaper ad. Don’t be afraid to pay a little extra for a longer or bolded ad if it means you will rent faster. You can also put such a bribe in a tenant letter. (Example: “Tell your friends we’re having a deal. If someone signs a lease by the end of this month, they’ll get a $50 gift certificate to TGI Friday’s.”)
* Bribe local employers. Offer nearby business a $100 referral fee for pointing employees in your direction.
* Bribe the community. Many libraries, grocery stores and community centers have public bulletin boards where it is appropriate to post things like this. Just check first to make sure it is alright to put such a notice there.

Be creative. If you can offer something to them that other landlords wont, then you will have the competitive edge in your marketplace.

The bottom line

Yes, this is an extra cost. It is, however, worth doing. If you spend $50, $100, or even $200 dollars to get your apartment filled, you get your cash flow back that much more quickly. Costs for an empty apartment add up fast. A $500 dollar apartment vacant for 3 months just cost you $1,500 bucks. If you had spent $300 on a new TV and a classified ad and gotten it filled within a week or two, at the end of those same three months, you would net $1,200. $1,200 in profit instead of a $1,500 loss. Not bad for a 3 minute phone call to the newspaper and a 20 minute drive to the electronics store.