real estate investor celebrating freedom on hike overlooking canyon




To The Aspiring Investor, 

First of all, I want to reassure you that vacancy rates that are higher than expected are a problem that many investors face. But you need to deal with this problem as soon as possible because high vacancy rates can have a big effect on your profit margin and your overall success as a real estate investor.

So why do high vacancy rates happen? Wouldn’t the world just be easier if we were able to fill those vacancies no problem? 

You’re absolutely right it would be. And if it were easy, everyone would be doing it. 

You’re not doing it because it’s easy. You’re doing it because it’s rewarding.

So why do they happen?

One of the main reasons, usually the primary culprit - is the gold standard of real estate no matter where you go. Location, location, location.

If your investment property is in an area where people don't want to live or where there’s a lot of competition, vacancy rates will naturally trend upward. 

Another reason could be that you’re not keeping the property as tip top as you could be. In a world with stiff competition and multiple choices - would you pick the property with better upkeep as well?.

Now, let's talk about why a high vacancy rate kills an investment's chance of making a profit. It’s simple math, really. Your rental income, which is the main source of cash flow for most real estate investors, is directly affected by your vacancy rate. A higher vacancy rate means fewer renters, which means lower rental income. 

This lower cash flow leads marginally to higher costs in terms of maintenance costs, property taxes, and mortgage payments, which eat into your profit margins.

So, what can you do to keep your investment property profitable and keep vacancy rates to a minimum? Here are five things you might want to think about:

#1: Market Research

real estate investors doing market research with projections and estimates over a desk

Before you invest in a property, find out as much as you can about the local market. Look for areas where people want to rent, where there aren't many empty homes, and where rent prices aren't too high. This will help you find tenants quickly and keep the number of empty units to a minimum, while helping you to avoid paying a premium sticker price on a property.

#2: Appearances Matter

high resolution photo of modern indoor living room aesthetic

Keep your property in pristine shape. Keeping your property in good shape can make a big difference in how easy it is to find and keep tenants. Maintenance and repairs should be done on a regular basis to keep the property in good shape.

#3: Stay Competitive

Unless you’re renting out luxury high rises, most tenants are looking at how much they’re going to pay ever month for rent. Setting a price that’s competitive, but not too low, helps you attract tenants and minimize vacancy. Run comps on your rental property to see what similar properties are renting for. 

#4: Marketing

Get creative in your marketing efforts. Utilize cutting-edge real estate marketing tools to actively pursue hot leads. Depending on whether it’s a short-term or long-term rental you can advertise your property online with sites like Craigslist, Zillow, and more. 

Take stunning photos for these sites, and write honest descriptions of the property to get people interested in renting it.

#5: Offer Incentives

Tenants want to pay 3 months of rent up front? Give them a 10% discount. Having a hard time finding tenants? Offer to cover the cost of wifi installation (usually only around $50 if you make a deal with a local internet provider). 

Get creative with your incentives, as more incentives will attract more, and higher quality, tenants.

Just in case you needed to hear it - you’re doing great, kid. Vacancy rates are something every investor struggles with, but trust me, there are things you can do to overcome. Just nail the fundamentals. Do your due diligence on the area, make sure your property looks good, set competitive prices, deploy rockstar marketing and get creative with your incentives. 

Make them a deal they can’t refuse!

You’ll get there - keep pushing.