Holding a vacant property for too long can quickly present you with several different challenges as a landlord. Despite real estate investing being known for being highly profitable, these profits come as a result of monthly payments. Without monthly rent, you’re hurting your bottom line.While costing you money isn’t the only problem a vacant property can cause, it’s essential to know some of the other risks involved. Let’s take a closer look at some of the impacts of holding a vacant house.
Should I Hold My Vacant House For A Prospective Resident?
The popular opinion about holding a rental house vacant is that you shouldn’t. The reason is that however long this prospective resident takes to decide, that is the potential loss of income for you. You are potentially losing out on other qualified applicants.You should consider having a pretty firm no-hold policy. With that being said, the only thing that should hold your house for somebody is a signed lease.We have seen that if you put a deadline on something, most human beings are going to procrastinate. A prospective resident may ask you to hold a rental house for a week or even 30 days. The majority of people are going to find a way to stretch that out as long as possible. But, if you tell them the only reason you will hold a house is if you have a signed lease, they will be more inclined to make things happen.
Why You Want to Avoid a Vacant Property
Although it might be tempting to hold your property for an applicant that seems like a perfect fit, the truth is, if they were the perfect fit, they wouldn’t be asking you to hold off. Instead, cut your losses and move forward with finding someone else if they will not commit to signing a lease.Here are just a few of the reasons why you want to avoid a vacant property at all costs.
Loss of Value
One of the primary concerns of a vacant property is the loss of value over time. This loss magnifies tenfold if the property is not maintained during its vacancy. If you decide to give your marketing efforts a break and pick back up again later, you might find renters no longer interested. Additionally, there will more than likely be things around the home that you will now need to fix, costing you even more money without any rental income coming in.
Structural Damage
Homes do better when there are people inside of them, keeping them well maintained. A vacancy property is more susceptible to structural damage, sadly. If your property sits vacant for too long, it might be more prone to things like:
- Fungi
- Mold
- Rot
- Termite damage
Unfortunately, all of these long-term damages can be pretty harmful to your home. You will more than likely have to spend a lot of money to repair and/or eradicate the problem before it is rent-ready once again.
Loss of Rent
Not renting out your rental property is the most significant loss in investments there is. With a home that sits vacant, a landlord receives no rent whatsoever. Any damages that happen will come straight from the landlord’s pocket.
Property Taxes
Even though your home might be empty, you are still responsible for paying your annual property taxes. You’ll find that these costs are a bit harder to swallow with absolutely no income coming in from your rental property.
Insurance
A caveat within most standard homeowners’ insurance policies is that damage, theft, or other problems that occur in a home will not be covered if the house has been vacant for a certain amount of time. Usually, this timeframe is somewhere around 30 days.Since the risk for damage and theft are so high in vacant homes, insurance companies are sure to put clauses such as these in their policies.Always make sure to speak with your insurance agent so you know the details of your policies. If able, you might purchase additional coverage that they can provide in the scenario that the home is vacant for an extended amount of time.
Maintaining Vacant Property
If you fall upon unfortunate circumstances and have a vacancy property, here are a few tips to help keep it maintained.
Make it Appear Lived-In
Even if you don’t have anyone living on your property, there are simple tricks to make it appear like someone inhabiting it. Consider things such as:
- Automatic sprinklers
- Automatic lights
- Mail forwarding
Install a Security System
Since theft and vandalism rates are so high in vacant homes, it’s in your best interest to set up a security system right away. With a security system, local officials will be notified right out of any break-ins.
Perform Repairs
Keep all of the areas within the home in good condition to help maintain the appearance of someone living in the house and therefore minimize your threat for damage. Performing repairs also allows you to keep on top of things if you have a last-minute interest who wants to check out the property.
Maintain the Outside
Along with the inside of your home, checking the curb appeal is equally as important. Keep the lawn and garden maintained, the gutters and walkways clear, and remove clutter as you are able.
How to Sell Vacant Property
If you decide you’re ready to sell your vacancy property, here are a few tips to help get the job done:
- Consider a cash buyer
- Ensure your insurance is still valid
- Add lighting to warm up dark areas
- Add a security system
- Add a remote thermostat
- Have a good understanding of your market
- Schedule regular cleanings
- Always remove debris and clutter
- Consider staging
- Prioritize key areas of staging
- Work with a real estate agent
- Spice up your curb appeal
Final Thoughts
As you can see, the headaches alone with having a vacant property can quickly become overwhelming. Instead of dealing with the emotional and financial toll of having a vacant property, make sure you are well prepared instead.
