Have you ever wondered, why certain storefronts, and apartments, etc, seem to remain vacant, longer, than other similar ones, which might be owned by different owners/ landlords? Different owners seem to have differing philosophies, perspectives, and points of views, when it comes to key components, including: pricing; tenant quality; occupancy rates; and overall cash flow requirements, and priorities. Although, there is no such thing, as an iron – clad, way, to manage any particular property, this article will attempt to briefly, consider, examine, review, and discuss, some of the options/ approaches, including advantages and disadvantages, and other considerations.
1. Pricing: Whenever a property, either residential, or commercial, becomes available/ vacant, the specific owner, must make many decisions, about the best way to proceed. Perhaps, one of key considerations, is about pricing it. It seems, many owners, especially those owning commercial buildings/ storefronts, decide to ask as high a price, as they believe, they can. Because of this, we often witness, larger turnovers in some locations, than others. What is often confusing, is, why they don’t realize, or seem to care, that, every month, it remains vacant, means it takes, many months, or longer, to make up, that loss of rental income. Some believe, it is important to proceed this way, because, it will set the level of future rents, and although, this may, perhaps, be true, it only will, if they don’t constantly experience turnover, and prolonged periods of vacancy! This is even more true, when it comes to residential properties. My wife and I own several residential units, and, are pleased, we have amongst, the lowest turnover and vacancy rates. We would rather price these units, more conservatively, and lower, and maintain high quality, dependable tenants!
2. Tenant quality: One of the costliest parts of owning real estate, is, every time, we need, to find a new tenant. Doing so, often, requires additional fees, marketing expenses, maintenance/ repairs/ renovations, and time/ hassle! If you find reliable tenants, doesn’t it make sense, to try to find common ground, and a meeting – of – the – minds, to keep them?
3. Occupancy: Those who maximize their occupancy rates, often enjoy far less stress and hassle. Carefully considering the two factors, above, is a significant factor, in your best interests!
4. Cash flow: Owning income property, produces the least amount of stress, tension and hassle, and, generally the best results, when there is the best possible focus on maintaining the necessary cash flow, to cover monthly expenses, etc.
Being a landlord, might, either be extremely profitable, or a nightmare. Focus on the bigger picture, don’t be greedy, cherish quality tenants, etc, and you will maximize your possibilities, in the longer – term.