The vacancy is a cash flow killer. For your Oklahoma City rental to do well, it has to produce rent on a consistent basis. This article talks about how to minimize vacancy rates for rental properties and rent out fast. And, what we do to minimize the vacancy rate in our Oklahoma City rental properties.
Ideally, your tenant will NEVER want more from the property. I had a tenant once for 18 years in the same apartment. But that’s definitely not normal.
On average, a tenant stays about 3 1/2 years in our single-family homes. And, about 1 1/2 years in apartments that we have leased.
A logical question becomes what the average vacancy rate would be based on these numbers. It’s actually not enough information. It also depends upon how long it takes to do the make ready for the unit. And, once the make ready is done, how long it takes to lease the property.
OKC Metro Trends for Rental Properties Vacancy Rates
Vacancy data obtained from deptofnumbers.com.
As you can see in the table above, the vacancy rate for the OKC metro area is currently 9.09%, which is higher than the national average of 6.18%. This is a blended average for homes and apartments. It’s a good number to use for projections.
3 working tips for minimizing your vacancy rates.
#1. Buy the Right Areas on the Right Streets: The 1st Aspect of Renting Fast
But there are some neighborhoods that are in higher demand than others. These higher demand areas have homes that are newer and the schools that people consider desirable. For example, many parts of Edmond, far northwest Oklahoma City, far South Oklahoma City into Moore, and Bethany. In high demand areas, the vacancy can be as low as 5% to 7%.
In the average neighborhoods in Oklahoma City, the vacancy rate for OKC rental property ranges from 7% to 10%. That fits right into an average rate of 9% presented above. I’d include most of the blue-collar neighborhoods in this category. These would include older neighborhoods in the core of Oklahoma City, both on the northwest and southwest. It also includes parts of northeast and southeast Oklahoma City.
However, there are tough neighborhoods in parts of northeast and southeast Oklahoma City, Midwest City, and Del City. In these tough areas, the vacancy rates can range from 10% to 20%. But don’t get me wrong, there are certain streets that have these higher vacancy rates. I’m not saying all of northeast and southeast Oklahoma City have these higher vacancy rates because it is not true. Only on certain streets.
#2. Buy Rentals that the Market Wants: Customer Starts Looking for You Than You do
Some properties are just more desirable than others. Tenants stay in desirable properties longer.
So what is a desirable property? I’m not talking about the neighborhood here. I’m talking about the makeup of the building in the neighborhood.
For starters, you don’t want properties with ongoing problems. For example, houses with basements that flood all the time. Or, properties that need upgrades to plumb, electrical, and/or heat and air. In my experience, once you eliminate those issues, the properties stabilize. And let’s face it, what kind of a landlord are you to move people into a property that you know has issues that are so bad that tenants move out as soon as the lease is up, if not sooner? Don’t be that guy.
#3. Upgrades that Make Sense: Minimizing Vacancy Rates not possible in non-rent Ready Property
There are times when it just makes sense to invest in your rental properties. I’m not talking about spending needlessly on rental property upgrades. Here are a few examples of what I’d consider to be money very well spent:
Weatherizing a property with high utility bills. Nothing will drive off a tenant faster than living in an uncomfortable property they pay through the nose to heat and cool. I have written an article about affordable weatherization tips.
Security measures. I’ve managed properties that keep getting broken into, over and over. This is a bad situation for all involved, obviously. Most often, we will install a security system in which the owner pays for the monitoring. I’ve done that in some of the properties I’ve owned as well. I believe you make a high return on that because the tenants stay longer, they see the value in the security system, and you can charge higher rent.
Cosmetic improvements. The right cosmetic improvements can make a huge difference. Properties rent faster for more money. And, I think the tenants stay longer in a unit they feel better about. There is just something that feels better about a property that has been freshly painted. Or, has a new carpet. I have written an article about cosmetic improvement to OKC rental properties.
The Property Management Company’s Hustle Factor
A property manager plays a huge role in the vacancy rate of a property. Here are some of the ways property management companies either run off tenants or do a great job in retaining them for as long as possible.
How responsive is the company? How quickly do they get on top of maintenance or other types of requests? But on the other hand, the owner has to do their part in getting back with the property management company as soon as they make a request to fix a problem.
How quickly do they get make readies turned around? The day the tenant turns in their keys, there should already be a specific plan in place to handle the make-ready. And, work should start as soon as possible.
How long does it take to lease the property? Sometimes it’s possible to advertise the vacancy before the tenant moves. Other times, it’s best to wait until the make ready is done. Advertising should begin as soon as good photos are available.