The best way to manage vacancies is to do it upstream. In other words, you can do your part to prevent vacancies by choosing the right tenants.
As I’ve said before, I believe there is a tenant for every property – and finding the “right” one should be important to you as a property owner. To do this, you must start by setting rent at a price that attracts the right tenant pool.
Take Springfield, Ohio as an example. A good, stable job for someone in Springfield looks like $15 an hour working at Walmart, which is approximately $2,600 a month. That means we are going to charge about $800 per month for rent.
Here’s why: Ideally, we want our applicants to be earning at least three times the rent every month. At $2,600 a month, that’s a maximum of $867. While you could price your property at $850, you want to make sure people are comfortable with the rent they’re paying and are not going to be stretched too thin. You need to think about other expenses your tenant will have, like utilities, other bills (cell phone, insurance, etc.), and necessities like gas and groceries.
If you can afford to price your property at $800 a month, or even $750, you’ve got a better chance of renting that property for a full year – or even multiple years.
In the end, finding a good tenant who is happy to pay the rent – consistently and on time – is the best way to proactively prevent vacancies.
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