180: Strategic Tips for High Occupancy Rates

SHOW NOTES FOR EPISODE 180: STRATEGIC TIPS FOR HIGH OCCUPANCY RATES

The occupancy rate for a rental property is like the fuel for an automobile.  No matter how good a rental property is, it becomes irrelevant if it’s not occupied by good tenants.  But what if you own a rental property that is not attracting enough tenants, and therefore not generating enough profits.  In today’s episode, Bill shares a few “insider tips” that real estate investors can use to boost and maintain occupancy rates.

Tip #1: Focus on Marketing and Advertising

This may seem like an obvious one, but that’s only because it happens to be one of the most important factors that determine your occupancy rate.  Effective Marketing and Advertising can radically heal your occupancy rate and get it back up to an acceptable level.  It is a critical factor in attaining and maintaining high vacancy for your rental property.

Advertising a rental property might not seem like a task that requires a lot of considerations but it still is the number one way to attract new tenants to your property.  Some landlords may think, “Gee, everyone needs a place to live, and if I’m offering a property at an average or below average rent price, then someone will definitely want to rent it, right?”

Wrong!

Advertising and marketing is a form of art, and there are many ways to “get the word out” that you have a rental available.  It is also a very competitive marketplace and you want to stand out from your competition.  Whether you are putting a sign out in front of your building or posting ads online or in a local newspaper, you are “sending a message” to potential renters that will either turn them on or turn them off.

Let’s look at a few key tips that can help you stand out and attract great long-term tenants:

Tip #2 – The Location

One of the main factors related to your rental property, and one of the most important aspects of real estate in general, is the property’s location.  Remember – location, location, location.  Right?

Well, when advertising your rental property, you’re not only trying to advertise the property itself, but you’re also trying to share and even sell the positive points about its location.

Focus in on the main attractions in the area, especially the ones within a walking distance from your rental property.  Even a property in a “not so great” area can achieve a very high occupancy rate if it has convenient access to available local services and resources.

• Listing the Property – When posting an ad online or in a local newspaper or flyer for your rental property, you will always want to choose the right medium to promote your property. By medium, I don’t mean the location of the “For Rent” signs, although those also matter but are less relevant. You need to choose your promotional methods carefully when trying to list your property for rent.  While there are many websites that offer their listing services for free, most websites perform much better in certain areas than in others, and you might not want to waste time, effort, and possibly money on listing your property on a website that no one uses in your area.  Research the key websites and the mediums for your area.  Ask property managers or other investors in your area what are their most effective advertising mediums.  Are newspaper ads effective?  How well does Craigslist do?  Facebook? How about Apartments.com or HotPads.com?  Make sure you choose the methods that will give you the coverage that you need in order to fill that vacancy quickly.
• Targeting the Right Tenants – If you own a luxury apartment building that you’re trying to rent out to local college students, then it’s no wonder your occupancy rate is below 5%.  While college students might find a luxury apartment to be very appealing and would love to live in one, in reality, college students can’t afford a luxury apartment. It’s that simple. If you’re buying a property to rent out in a college town, then you’re probably better off purchasing an average “C or B” class apartment or other property to rent out.  By knowing what type of tenants best fit your property, you are more likely to effectively target your advertising efforts and get your place rented out quickly.  Students may be more interested in amenities that allow them to create “community,” such as outdoor barbeque areas or swimming pools, as opposed to seniors or retirees who are interested more in a quiet, safe area that has easy access to public transportation.
• The Power of a Photo – They say a “picture is worth a thousand words.” Well, the right photographs could be worth a thousand fantastic tenants!  Don’t discount the value of effective photographs and don’t be cheap by trying to do it yourself.  Keep in mind, nothing is more boring and unappealing than photos of empty rooms. It is just hard to get people excited about your property.  Hire a local real estate photographer to take stunning photos of your property’s exterior and interior.  The $100-300 you’ll pay for their time, will be recouped with your first good tenant’s rent payment.

If possible, stage a photo.  By stage I mean, either take pictures of an existing tenant’s well-decorated unit or actually, bring in furniture for a “day-shoot,” complete with nice artwork on the walls and strategically placed accents throughout the unit, curtains, towels in the bathroom, flowers, etc. – to sell the warm “at home” atmosphere of your rental.  You want your potential tenant to think, “Wow!  I could really see myself sitting on that big comfy couch, a bowl of popcorn on my lap, sitting next to my lady and enjoying a movie on my 50” high def LED TV!”

Yes, I know, you are thinking that is WAY too much trouble – the cost and time involved!  But, believe me, the money and effort spent can be amortized out over the long term of your property ownership and will pay dividends for many years to come!  If you can’t get the right tenants in your property, that will cost you a heck of a lot more in the long run than the cost and time associated with a one-day photo shoot.

Use your photos and well-written descriptions to try to target the tenants you want to live in your rental property.  Create ads that will paint a picture in your potential tenant’s mind that will appeal to their needs, interests and lifestyles, and within a short amount of time, you will start noticing a difference in your occupancy rate.

Tip #3:  Make Your Rental Property Feel Like Home

While advertising your rental property might bring you a lot of exposure and interested tenants, most people will want to see the inside of a property before they move in and start paying rent.

In order for you to convince the prospective tenants that they’ve found what they’re looking for, and for you to see the numbers of your occupancy rate shoot up, you need to prepare your property to be viewed by the tenants.

• Seasonal Designs – While cleaning the property and tidying up is generally a good idea, it might not be enough to make your rental property stand out and feel unique when compared to other properties in the neighborhood, especially if you’re planning on maximizing the rental price that you’re asking for the property.

One of the main methods that will play a role in convincing your tenants that this is the property that they want to live in, is to design the interior of your property appropriately based on the season.  If it’s winter time, for example, then you will need to make your property look warm and cozy, with dark colors and less empty spaces.  Each season has its optimal design for increasing the occupancy rate, and you should learn more about them in order to make your tenants feel more at home.

Tip #4:  Stay Engaged

Of course, no matter how well you advertise your rental property, and how well you manage to convince potential tenants to rent it, your occupancy rate will remain low in the long run if you’re not investing enough time in managing the rental property well from the start by tending to the needs of your existing tenants.

An unhappy tenant will often leave negative online reviews in places like Google reviews or Yelp.  This can be one of the biggest factors affecting your occupancy rate.   Alternatively, keeping your tenants happy will result in them leaving positive reviews on your rental property, leading other prospective tenants to become more interested which will lead to a higher occupancy rate, and possibly even allow you to ask for higher rents — without affecting the occupancy rate.

In order to keep your current tenants happy, you need to provide them with all the necessary services, be responsive to their service requests, and keep the property in a good condition.  This requires things like the following

• Good Property Management – I believe the most critical tool available to owners of rental properties is a good property management company. A good property management firm can be an invaluable service to keeping your rental property in good shape and keeping your tenants happy.  If you don’t have the time to run and manage your own rental property effectively, then you should allocate a portion of the property’s rental income towards paying for a good professional property management company that will keep your property well-maintained, responsive to your tenants needs, and even manage several other aspects of your rental property – like reducing property expenses.
• Incentives and Gifts – Another way to keep your tenants happy and your occupancy rate high is to make your tenants feel special. For example, why not prepare a little “Welcome Gift Basket” for new tenants when they move in.  A $10 to $20 gift basket, complete with a few cleaning supplies, chocolates, or perhaps a bottle of good wine, that will be there when they move in, will make your tenants feel special and have a good lasting first impression that will set the right tone for the rest of their stay in your rental property (as long as you continue to treat them well).  It is very well-known that first impressions matter. And your tenants might be more inclined to leave a positive online review on day one that will positively influence other potential tenants. This will lead to positive word of mouth referrals as well, which is another huge factor that heavily affects your occupancy rate.

Conclusion

There are several factors that can make or break a rental property.  In order to maintain a healthy occupancy rate on your rental property and keep the cash flow coming, then you will need to actively get involved in the processes of advertising, marketing, promoting, decorating, and managing the property in order to your ideal tenant and keep your existing tenants happy.

If you’re looking for properties that have a high occupancy rate, you’ll need to TAKE ACTION I Test and evaluate various methodologies throughout the life of your property ownership – see what works.  Incorporate your most effective marketing techniques and strategies into your real estate business operations and systems.  Then, you will both attract and maintain a good solid tenant base that will make your investment not only profitable but also a pleasure to own and manage for the long-term.

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