Winter Vacancies
Winter vacancies can be challenging to fill. Low market demand, cold weather conditions, and holiday activities can influence how quickly a winter vacancy can be filled. Landlords can use a variety of strategies to attract prospective renters and move them forward to application and qualification. It is important that the goal is not to just “fill a vacancy” but to fill the vacancy with an applicant qualified to the rental standards.
People always need a place to live no matter the season. While a person may not want to move during the winter season, a change in personal circumstances; e.g., marriage, divorce, children, job related reasons, or simply needing more or less space, can be the decisioning factor to move. Prospective renters will prioritize their efforts to identify and evaluate potential rental properties according to their need and timeframe. Landlords wishing to fill a seasonal vacancy must actively market their rental properties across multiple channels to reach as many rental prospects as possible.
Landlords should develop rental policies keeping in mind the seasonal nature of real estate. There are peak periods of high interest in searching for rentals and correspondingly peak periods of moving into selected units. Understanding the market conditions of the local area, a landlord can direct his marketing efforts to focus on priorities and demographics of the area he serves.
Current market data combined with historical data provide guidance for vacancy policies and practices. It is critical that a landlord know the position of his properties in the local market. The business plan should be developed to maximize income opportunities during peak season and slow markets. Within that business plan the amount of business risk a landlord is willing to assume will give direction on how much flexibility the landlord has in business operations. Flexibility is a key part of filling vacancies during winter/slow season markets. If a landlord is willing to consider flexible lease terms and/or incentives, he may find that a December or January move-in can be a good decision for qualified renters and his business. By being flexible, the landlord may avoid having a vacant unit during the winter months.
The advantage of being knowledgeable of local market conditions helps in the landlord’s marketing efforts. Most landlords know what works for them for their properties. It is better to concentrate efforts on those listing sites or social media postings that have been successful before in producing qualified leads. Time is short and trying to appeal to everyone on all possible sites may not be productive and will certainly expend more time and energy in contacts and follow-ups. Better to devote time and energy in polishing the listing description to attract interest in the vacancy.
The best way to handle winter/offseason vacancies would be to avoid having leases expire during the winter months. A landlord can reasonably control this practice by the way his lease agreements are drawn by staggering lease expirations to occur within the peak season . This practice avoids a vacancy in slow winter months. For example a tenant moving in the month of December could be offered a 15-month lease to expire during the beginning of the peak season rather than a 12-month lease. If the landlord offered a standard 12-month lease, the landlord would have to deal with marketing the vacant unit once again during a December slowdown.
There is a practice that would give the landlord advance notice in scheduling the move-out and the preparation of a vacated unit. For example, many fixed term lease agreements require the tenant give 30 days’ Notice of Intent to Vacate the rental property. As long as there are no statutory restrictions to the contrary, a longer notice period such as a 60 day notice requirement gives the landlord more time to prepare for the upcoming vacancy including scheduling an inspection of the premise to determine how much prep work will be needed to return the unit to market condition. Time is money and reducing the time the unit is off the market allows quicker turnaround to install an incoming producing tenant.
A landlord may want to consider offering a short term renewal to a tenant whose lease expires during the winter months. Rather than having to search for a new rental and move during the winter months, the tenant may be agreeable to a few months extension of the lease. A short term lease may benefit both landlord and tenant in this situation. Ideally the length of the short term lease would carry the tenant into the peak season. Should the tenant’s plans change at that point and the tenant wishes to renew the lease for the standard term of 12 months, the landlord has avoided a future vacancy during the winter season.
A landlord could consider offering a month-to-month rental agreement to keep the unit occupied during cold weather months. .A landlord would need to research landlord-tenant statutes for month-to-month rental agreements for his property locations. Generally, a month-to-month agreement can be terminated with a 30-day notice to vacate. In some situations this could bring a termination date closer to peak season. While a vacancy would not be entirely avoided, a delayed move-out could be of benefit to the landlord. Screening and qualification should of course be conducted for any length lease term.
Because of the timing of a winter vacancy there is some urgency to move quickly to fill the vacancy. A landlord may wish to review his rental processes to determine if there are more efficient ways to expedite the filling vacancy process. While the winter season may be slower for demand, it does not mean there is less competition for a vacancy. The prospect has made a deliberate choice to search for a new home and has likely expressed interest in more than one property. An interested prospect evaluates landlord response as well as property amenities in their search for a new rental. A simplified process that makes it easy on the prospect to apply, qualify, and move-in is more likely to result in tenancy. The focus of the review should be on ways to streamline processes with greater efficiencies, technology, and service.
The landlord’s ability to be flexible with the length of the lease term and remaining open to offering winter incentives can be quite attractive to renters. For example a landlord could choose to offer an incentive to move-in during the months of December and January. By discounting rent for those two months, an incoming tenant saves money, the unit is occupied, and may be the tenant’s decisioning factor over a competitor’s rental. The lease agreement should clearly state in understandable terms how the incentive can be used – i.e., tenant agrees to 12-month lease agreement, rent incentive is applicable to the first two months of the lease, there is a penalty for early termination of the lease, offer is contingent upon applicant qualifying to rental standards. Using the example of a unit rent of $1100 per month, the incentive to move in now would discount December and January rent to $1000 per month with the remaining 10 months’ rent at $1100 per month.
It could be a modest investment on the landlord’s part to offer a rent incentive but by doing so a rent incentive could bring more interested prospects and qualified applicants to selecting the vacant unit. When screening applicants for this incentive arrangement, landlords should be sure to qualify applicants to full financial rent obligations; as in the example, 12 months’ rent at $1100 per month.
A landlord should also consider his ability and willingness to handle vacancies during the winter season. While it could be a slow market in his local area, the landlord himself may have many other commitments on his time and energy to adequately market and service the vacancy. A landlord may give thought to outsourcing rental management to a property management company. Professional property management is available to a landlord as an option at any time. Whether self-management or professional management of his rental properties, it is the landlord’s decision to determine the best solution for his business needs, his properties, and his market.