As a San Diego area property manager, one of your main priorities is likely maximizing your annual rental income. This means minimizing your rental vacancy rates. We believe we’ve uncovered a secret to achieving both of those ends and we’re willing to share it with those able to comprehend the importance of just a few simple numbers.
Vacancy Rates
The first number that’s important to understand is San Diego County’s overall rental vacancy rate, which currently stands at a low 3%. This means that, at any given time in the county, on average, only three out of every 100 rental homes and apartments are standing vacant.
Tenant Turnover
The next number it’s important to understand is the vacancy rate you’ll typically experience if you follow the operating procedures that most property managers follow. This will likely bring your vacancy rate to more than double the average county rate – a whopping 7.7%. We’ll explain.
When tenants give notice, it’s usually done at around the first of the month, giving them time to find a new place by the first of the following month. The problem this presents is that if you’re not ready to immediately begin the marketing and re-renting process you’ll likely lose a complete month’s rent while the property sits vacant. If it stays vacant for six weeks, this pushes your vacancy rate up to 12.5% – more than triple the current vacancy rate average.
The Secret
Now for the huge, yet simple secret. We set our leases to expire on the 15th of the month rather than at the end. When someone signs a one-year lease at the first of the month it’s still set to end on the 15th. This means they’ll be signing 12.5-month lease. This way, you’ll be able to move new tenants into the vacated space before the beginning of the next month, which is when most renters looking for a new place need to move into their new place.
But you need to be willing to work fast. When notice to vacate is given you need to immediately get into that unit to check its condition. If the vacating tenant will allow it, you should also start showing the property as soon as possible. On the day they move out, you should be ready for the carpet cleaners to come right in to do what they do and for the painters to immediately being their touch up work so that a new tenant can be moved right in, with a minimal amount of vacancy time.
Let’s face it – with an average countywide rental vacancy rate of only 3% it’s obvious that there are a lot of people looking for rentals. You should be doing everything you can to minimize your properties’ vacancy rates; otherwise you’re losing money that can never be recouped.
If your vacancy rate is 7.7%, more than double the county average of 3%, that extra 4.7% translates out to a loss of $1,100 for the vacancy of a $2,000/month property rental. Our goal is to keep vacancy rates to no more than 1.9%. You can too, following this simple “secret!”
© SOS Management & Property Services, Inc.
San Diego’s Premier Property Management Company
Local: (858) 273-8800
