One Of The Biggest Mistakes Made By D.I.Y Landlords And Real Estate Investors

Attempting To Advertise Occupied Properties For Rent Before Current Tenants Move Out.

Reducing vacancy is the primary goal of all real estate investors and property managers. This goal is a function of all the aspects that go into managing a rental property. Maintenance, tenant relations, rent collection, condition of the property, advertising and leasing are all important variables in this equation. Considering the main goal is to reduce vacancy and often a landlord knows before a tenant is moving one would think that beginning advertising when the unit is still occupied would be a great idea, but this could not be further from the truth and is one of the biggest mistakes made by “do it yourself” landlords. Advertising occupied properties for rent is inefficient, unprofessional, and has many risks that can be very expensive and counterproductive.

Focus On The Things You Can Control.

Inefficiency is the enemy to maximum returns. This is true for your invested time in managing your property as well as the actual monetary investment. Advertising occupied properties is terribly inefficient because you are forced to make assumptions on aspects outside your control. You must assume the tenant will be leaving at the specified date, that the property will be in rentable condition, all mechanical elements of the apartment will be in working order and that the incoming tenant will accept the condition of the property on the specified date and nothing will go wrong. Besides gambling on the vacate date, condition, and move in dates all lining up perfectly you would have to rely on cooperation of the existing tenant during the advertising. So now you would be hoping that they tenant is keeping the unit clean and presentable and also that they will allow access when prospects are available to view the property. All this hope would be placed on a tenant who has no incentive to be cooperative or a need to deal with this inconvenience. Advertising a property in this manner is unprofessional.

Use Turnovers As Opportunities To Ensure Units Are In Best Possible Condition To Attract Highest Possible Rent And Quality Tenants.

If a property manager tells you, they will advertise properties with tenants still living in them you should likely look for another property management company. It is extremely unprofessional to essentially offer to sell a product you do not have, cannot guarantee delivery of, or verify the condition of the product at the transfer. This is what a landlord or property manager is doing when they advertise occupied units. They are saying “here is something that might be completely different than what you see here that I can possibly rent to you at an undetermined time in the future”, crazy. Imagine a used car salesman saying, “I can get you a car that might look like this one, in a random color and you can have it maybe on this day”. The likelihood of a tenant cooperating, keeping the unit in top advertising condition for showings, leaving the unit in rent ready condition when vacating and doing so without the need of an extra day or two is low. Now add the fact that you need all those things to line up and you need to find a tenant that is looking to move in on or shortly after that date, obviously this becomes an extremely low probability event. Any property manager who spends time on these types of unproductive activities with high risk is likely costing clients time and money in many areas.

Tenants Looking To Move ASAP Are More Likely To Be Mid Eviction!

If you are trying to rent a property before a tenant leaves that means you are showing a property that is below average vs the other available properties, you have a natural pressure to accept the first applicant and you will not be able to maximize the future rent rate. If your property is below average you will not be able to command the highest possible rent, this can easily cost more money over time than the money saved with a short vacancy period. In addition, you will be at a higher risk to attract tenants who are looking to move asap. Landlords who are advertising occupied properties for immediate move in are most likely to have poor tenant screening practices and tenants who need to move asap are the most likely to be in the middle of being evicted at that time! Subpar marketability coupled with lack of tenant screening are two main causes of poor returns that are a result of landlords attempting to save money, running into bad tenants so they lose more money and then the process repeats and worsens until they are forced to sell or lose the property. The best investors and property managers build in time to repair, upgrade, and market for maximum rent after each vacancy while avoiding the risky inefficient practice of advertising occupied units that is the root cause of many a failed landlord.

Nick D'Agnillo is the CEO & Founder of Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

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