Finding Your Ideal Tenant
At Atlas Real Estate, ‘finding your ideal tenant’ is always one of the first things we discuss with an owner who needs to fill a vacancy It is of foremost importance to understand who an ideal tenant for your vacancy is before starting the search. An owner needs to think about the topics listed below:
How long do you want this tenant in-place? Is this a temporary rental, or are you looking for long term tenancy?
These questions will get you thinking about who you want to target and which tenant applications deserve to be given the most weight. For example, a rental that will only be available for a year might be a better option for a young professional who has recently moved into your area. This tenant may be looking to purchase soon and could be a better option than the family who will not want to deal with moving again in a year.
What is your vacancy tolerance?
In a market where rents are increasing 5 percent a more a year, you must understand your rental goals and how they align with the market. Is it worth it to increase rents 5 percent or more and risk the vacancy loss, or does it work better for you to stay between a 2-3 percent increase and keep your tenant happy and in place? It’s important to determine your goals here beforehand so you can plan for financial success.
How much time and capital do you want to spend on advertising the vacancy?
If you aren’t using professional 3rd party property management, it can be overwhelming when deciding how you are going to advertise your rental, not to mention time-consuming. It’s important to think through a plan based on target audience, market strength, and messages that resonate with them before spending capital on advertisements. From there, you can execute. For example, in Colorado Springs you may benefit from looking for renters employed with the U.S. Military, and in this case, it may be beneficial for you to direct advertisements to communication platforms that military personnel use frequently.
What is the target time of year for a lease renewal?
In Colorado, we experience high seasonality in the rental market. At Atlas, we find that rents can be anywhere from 5-10 percent lower in the winter season. We find there is significantly less traffic for renters from November-March and rents sometimes need to be reduced to fill properties with the right tenants. Because of this, owners need to consider when their renewal period will occur. Signing a 6- or 18-month lease in December may be significantly beneficial for owners who want higher rents.
Having a solid plan in place will prepare you more effectively for finding the ideal tenant. Leasing is an imperfect art but thinking through these points will prepare you as you prepare to weather the rental market.
