When you decide to invest in San Mateo rental real estate, you know you’re going to face some ongoing and expected costs. There will be maintenance and repairs as well as professional property management and landscaping. You’ll have to pay to market your home and prepare it for residents.
Many owners forget to budget for vacancy.
Vacancy is extremely expensive for rental property owners, and it’s hard to plan. Longer vacancies really cut into your cash flow and your ROI, and they’re best avoided. To help you budget better, we’re explaining how vacancies affect your profitability and what you can do to avoid them.
Property Pricing in the San Mateo Rental Market
No landlord sets out to intentionally underprice a rental home. That only leaves money on the table and stunts your income.
However, overpricing a home can be just as expensive and potentially even more damaging. Why? Because overpriced homes stay vacant for longer. If the rental value you’ve attached to your property is higher than what the market demands, you aren’t going to have any tenants interested in renting it.
Perhaps you want to rent your property out for $2,500, but most homes like yours are renting for $2,200. You can hold out until you find someone willing to pay the $2,500, but it might take two or three months. That means you’re losing thousands of dollars a month in vacancy costs. Is the $300 per month worth it? No. You’re losing money and your profitability is plummeting.
Conduct a comprehensive market analysis using reliable data from professional San Mateo property managers. This will help you price your home more accurately and avoid long vacancies.
Paying Out of Pocket for Maintenance and Utilities
Another way that vacancies harm your profitability is by forcing you to pay for things like utilities and cleaning when the home is unoccupied. When you have tenants in place, they are usually responsible for things like the electric bill. But, when the home is empty you’ll have to pay to keep that electricity on. You can’t show prospective tenants a home without lights and water. You also need to keep the home clean, well-maintained, and updated. The curb appeal is important when you’re trying to rent it, so you’ll have to pay for a lawn service or landscapers. Those costs add up.
You can avoid this cost by making your turnovers brief. When a tenant is moving out, prepare to clean and repair the home right away. Get your vendors scheduled and begin marketing your home as soon as possible. The shorter the turnover period, the lower your cost during the vacancy.
Vacant Homes Invite Bad Behavior
Another major expense when it comes to vacancy is that your home is at risk for property damage, neglect, and even trespassing. If it’s obvious that your property doesn’t have anyone living in it, someone could try to break in. You’ll have to worry about squatters and vandals. This may require extra security or additional time spent at the property making sure everything is in order. It costs you time and money to have your property vacant and open to people who could potentially do you harm.
Avoiding vacancy doesn’t have to be a challenge. When you provide a well-maintained home that’s priced competitively, you can count on good tenants wanting to rent it. When you work with a San Mateo property management company, you’re increasing the odds that it will remain occupied and in good condition.
Please contact us at Five Star Property Management, and we’d be happy to tell you more about how to reduce your vacancy risk and loss of profitability.