Vacancy rate is an important metric property owners must be tracking to accurately understand the performance of their real estate portfolio. By vacancy rate we mean knowing the average number of days or weeks per year that your rental unit sits unoccupied without any paying tenants.
A good rule of thumb is to try to bring the average vacancy rate down to about 5% over the long term, though this number can vary depending if your unit is in a rural or urban area. It’s also normal for occupancy to fluctuate seasonally.
Some years you will have no vacancy at all because the tenant is in the middle of a two-year lease. Other years you might have an extended vacancy when the tenant moves out and you have to get the property turned over for the next resident.
How to Reduce Your Vacancy Rate
One of the best ways to increase occupancy in your rental properties is to enforce strict rental screening criteria to improve the likelihood of placing a good tenant. It’s important not to rush the leasing process and place just any tenant who might have a security deposit in hand.
Though this process can take some time, it’s worth it in the long run. Good tenants tend to result in longer leasing timelines and yield competitive rent rates – both of which are good for your bottom line.
As you consider your property investment goals and how to improve your NOI, please don’t hesitate to contact us with your questions. Our team at RL Property Management is responsible for more than 600 units in the Columbus area and have more than a decade of experience helping property owners like you improve their portfolio performance.