In the last half of 2022, winter was setting in, the holidays were upon us, the Fed was raising rates, and the pundits (whoever they are were telling us landlords to buckle down. That was short-lived!
We had been running 3% or less since before the pandemic (when we started keeping track of such numbers.) That vacancy level is not just considered “full” by multi-family standards, it is downright crazy by any standards!! To run at less than 3% for two solid years is, well, unheard of in this modern era. Yet there we were.
During the last half of 2022 our company did see a rise in vacancy levels to as much as a whopping 5%. To put this into perspective, we consider 6% to be the average vacancy rate for single family rentals. Anything above that gets our attention. Anything below that we consider ‘full’. So when we got to 5% we started to sit upright and take notice.
Now we are consistently back below 3% again. Some of that has to do the ‘holiday hangover’ (from credit card debt) receding and the weather starting to warm. (Although not nearly quickly enough on the warm front, from this author’s perspective!) A HUGE part of that has to do with our proprietary marketing strategy for our rentals.
First Rule of Marketing Rental Property
About 9 years ago we developed a marketing strategy that has proven itself over time. Yes, we had to make a few adjustments in the last half of last year, but we still held strong, and still kept vacancies below average for the market.
Our strategy is based on testing the market to maximize rental income, while at the same time not letting the property grow stale. There is no sense delaying the lease-up by two weeks chasing an extra $50 or $100/mo. With vacancies it’s all about the second rule of marketing rental property: it has nothing to do with cash, and EVERYTHING to do with cash flow.
The problem with most PMs is they don’t understand the FIRST Rule of Marketing Rental Property. The true test of a good PM is not moving someone IN to a property but when it comes time to move them OUT! Most PMs pride themselves on their ability to lease property up quickly. They do not correlate the high eviction rate back to this quick lease-up strategy.
At Full Service Property Management, even in spite of our super-low vacancy rate, we do not boast about quick lease-ups. In fact, just the opposite. We tell our clients we are not the quickest in that department. That is because we don’t want to be the quickest! We want to be the best! In order to be the best, it takes time and effort to find the right match of good tenant with each property.
That probably explains why we have had only ONE court-ordered eviction in 11-1/2 years!!!