Filling Vacancies Faster

By: Wojciech Kic

A cash flow start-up of a single family house rental is dependent on a number of sequential events. A landlord must acquire a property, make it market-ready and secure a tenant who will pay rent for the landlord’s efforts. Each landlording (read: management) process is further divided into a number of subparts that, when completed and added together, represent satisfactory property ownership.

What unlocks the cash flow gates in a rental property is a lease agreement. Presuming that a landlord has completed the make-ready maintenance and repairs, he can then initiate the process of marketing the property for lease.

Before placing the house on the market for lease, it is necessary to define the marketing process that will soon take place. To some property owners, the upcoming marketing process means finding a new tenant. But exactly how does one find a tenant? There really are no tenant gathering places, clubs or associations. Going to a busy mall and attempting to find a tenant with a specific need for the landlord’s one specific house somewhere, is–well–unrealistic.

Since finding a tenant is not what landlords do, exactly what do they do when marketing a house for lease? Landlords market a house for lease by posting messages in the marketplace for the tenants to help them find the landlords.

Tenants typically initiate a house finding process by searching a current or targeted neighborhood.The preliminary process starts by tenants getting into a car to find a “For Lease” sign on a house that looks like it meets their needs. Once the tenants find a “For Lease” house, they search for its owner.

The most effective method of communicating the availability of a house for lease to the prospective tenant, is a “For Lease” sign. The most effective method for prospective tenants to contact the landlord is to call him at the phone number listed on the “For Lease” sign. Thus, while cer tain “For Lease” sign designs may be more recognizable than others, the only necessary ingredients of an effective “For Lease” sign are the words “For Lease” and the landlord’s phone number.

The “For Lease” sign creates a dynamic in the marketplace.The physical characteristics of the “For Lease” sign and the timing of its placement will impact the quality of the actual lease and the length of the marketing period.

For example, usage of “For Lease” riders on “For Sale” signs is not recommended.
Such makeshift “For Lease” signs communicate landlord indecisiveness that experienced tenants avoid.The resulting lease between a reluctant landlord and an accidental tenant is likely a short-term experience for both parties.

The usage of flier boxes attached to a “For Lease” sign is also not recommended. For a flier box to be effective, it must be constantly full. Relying on prospective tenants’ good nature to call the landlord when the flier box is empty is contrary to the sense of a rational tenant.To call a prospective landlord to advise him that the flier box is empty is a favor that the prospective tenant does not have to extend elsewhere to receive free rental information.

The second purpose of the “For Lease” sign is for the prospective tenants to call
the landlord. But, for the “For Lease” sign to serve its function, the landlord must be prepared in advance to accept every call during reasonable business hours. However, some landlords are not available during regular business hours. Instead they rely on answering machines to capture prospective tenants’ interest by recording the tenant’s names and phone numbers. But, in observation, answering machines only deflect prospective tenants’ interest.

Tenants’ messages are misinterpreted. Landlords interpret the messages as a sign of interest in the property. “My message box is full daily,” brag prospective landlords. But the box is full of messages saying, “I called you and you were not there.”

The landlords interpret the recorded phone numbers as invitations to return calls. But tenants leave phone number merely to validate their complaints.The mistake of a returned phone call is met with exasperation: “Thank you for the returned call, Mr. Landlord, but . . . I found another place . . . yes . . . minutes before you called back. Good luck!” Following acceptance of a phone call from a prospect, a landlord must be ready to show the property on time with a couple of hours notice. Alternatively, an appointment made for tomorrow because of an inconvenience today is a “no show”; tomorrow is a tenant’s turn to waste a landlord’s time.

Also bear in mind that in an abundant real estate marketplace, tenants call about
“For Lease” signs only when they are ready to make a move.Thus placing a “For Lease” sign on the property before it is available does little to secure a just-in-time lease agreement. The “For Lease” sign quickly attracts existing pent-up demand. If the pent-up demand is extinguished before the property is actually available for occupancy, the “For Lease” sign quickly becomes stale. By the time the property is actually vacant, the “For Lease” sign becomes invisible.

Landlords get tremendous benefits from a “For Lease” sign if they are willing to work it. Willingness to work the dynamic created by the “For Lease” sign requires a muscular effort; a short vacancy period is the reward.

In addition, the “For Lease” sign channels the conversation of the market to the land- lord. Landlords participating in such conversations receive instant market updates. Armed with that information, the landlords can quickly make the marketing adjustments to their product (i.e. rental house) to meet evolving market needs and experience a short vacancy period all over again.

Thus, the “For Lease” sign is a key element of a winning marketing strategy. It effectively helps to secure new leases. A poor “For Lease” sign, on the other hand, is an invitation to the tenants to play a “Hide and Seek” game landlords are unlikely to win. Winning by hiding from a tenant is a game successful landlords never play.

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