Today we are sharing the number one secret to maximizing your annual rental income. If you didn’t know there was a secret, pay attention to these numbers.
Vacancy Rates
The first number you need to know is 3 percent. That represents the countywide vacancy rate in San Diego County. This tells you that of all the apartments and rental homes in San Diego, only 3 percent of them are vacant at a given time.
Tenant Turnover
The next number you need to pay attention to is 7.7 percent. That’s the vacancy rate you will achieve if you follow standard operating procedure. When tenants give notice that they’re leaving, it’s usually around the first of the month so they can move into a new property and start another lease on the first of the following month. If you’re not proactive and ready to start the marketing and re-renting process right away, you’re going to lose a full month of rent. That 7.7 percent number reflects a full vacant month. This puts you at more than twice the local vacancy rate. It means you are 4.7 percent over what the vacancy rate reflects.
If it’s vacant for 1.5 months, that’s lost revenue of 12.5% — that’s 4 times the County average!
The Secret
The secret that we implement here is to end our leases on the 15th of the month. Even if someone signs on the first, they sign a lease for the period of 12.5 months. That way the lease ends on the 15th and we can move someone in before the start of the next month – when most people who are looking to move need to be in a new apartment.
We also work fast. When a tenant gives notice, we’ll go in and check the property’s condition. If the tenant allows it, we’ll start showing the property right away. That way, on the day the tenant moves out we have carpet cleaners ready and painters prepared to touch up the walls. Repairs start right away and we can get a new tenant in with a new lease right away.
With the whole county at a vacancy rate of 3 percent, we know a lot of people are looking for rentals. So if you’re not doing everything you can to minimize your own vacancy term, you’re losing that money forever – you can’t re-coup money from a vacant period!
Consider how it affects your investment income when you are 4.7 percent above average. If you rent a property for $2,000 a month, that’s a loss of $1,100, which is incurred just by not being proactive. Our goal is to keep our vacancy rate at around 1.9 percent. You can achieve this when you reduce your vacancy period to seven days or less. It means you are doing far better than average.
If you have any questions about how to reduce your vacancy and turnover time, please contact us at MV Properties, and we’d be happy to tell you more.