Boost Your Multifamily Profits: The Secrets To Having Low Vacancy!

You're not the person who's just available to solve all their problems. You're not there to be their best friend. You're not their handyman. You are in fact the landlord. You need to treat it like a business relationship. The biggest expense you're likely going to look at as a landlord outside of buying a building is going to be the loss from vacancy. I've had multiple people I've worked with who delay forever on renovating a unit because they don't want to spend the money. They don't realize how much they lose. So we're going to go into a whole video on how you Find great tenants who are going to respect your space and how you keep them. Welcome back to the channel. I'm Christian Osgood, and let's dive right into the tenants. If you haven't yet, please like and subscribe, and here we go. When you're looking for great tenants, you need to have a great screening process. I'm going to start right there for this video. Your screening process is very simple. You want to make sure they have great credit, that you understand their criminal history, Hopefully they have none, but there's stuff that you may or may not be willing to work around. But you need to know who you are renting to. Do they have a history of paying their rent? And is their monthly income at least 3 times the rent? That is what we use. That tells me they can comfortably afford the rent and have an ability to live without getting pinched. When we've made any compromises on any of these, I've regretted it almost every single time. I've rented to someone with no rental history And that may be something that you're open to. They were in their 50s, they had owned their house previously. My— what I figured was, okay, they have no rental history, however, they've owned homes, they're in their 50s, they're not figuring this out for the first time, it's going to be fine. It's the first person I ever rented to. What ended up happening is they caused all sorts of problems. They called me all the time personally on the one unit I owned. It was a condo. They'd call me on basic stuff that anyone should be able to figure out, but it was down to the screws come loose somewhere. "how do we fix this?" I'm like, "That's not a work order. Just tighten it with a screwdriver." Those things will happen if you don't do screening. Now that's a really fun example. That same group, they were actually law enforcement out of Florida in the past. I figured that would be really good to have. I'm like, "Oh, they're probably good law-abiding citizens." They started an argument with people outside the unit who responded by throwing a brick through my window, which I had to then go clean up. So, how do you avoid these things? Well, screening process is everything. However, it's not going to be perfect every time. You will get, and we manage, I wanna say it's about 200 people that we currently provide housing for, either ours or people we manage for in our property management company, Multifamily Property Management LLC, the most creative name in the game. But we, when we're doing this, sometimes you screen, they pass everything, And it's still a nightmare. Your ability to limit that is everything. So how do you limit the problems you have? First of all, I recommend having a great team and not be the one on the end of the phone when you have tenant complaints. There are services that handle just the maintenance request. You can hire a great property manager. But if you're getting started, it's probably gonna be you for your first 10 to 15 units. Create a habit of being very responsive, but not hyper-responsive to everything that comes in. If they're calling you about little stuff, just wait 5 or 10 minutes before you respond. Don't always pick up the phone immediately unless it's an emergency, which you could always message immediately back. If this is an emergency, please call 911 or shoot me a text. I'm in a meeting right now. Basic things like that where you're quick to respond, you do your maintenance request, but when disaster hits because that one screw is loose, you're not the person who's just available to solve all their problems. You're not there to be their best friend. You're not their handyman. You are in fact the landlord. You need to treat it like a business relationship. Your responsibilities: provide a clean, safe environment that if you were in their exact same situation, you'd be more than happy to rent. That doesn't mean you only rent places that are Class A because you love living in Class A properties. This is saying, hey, if you're renting to entry-level housing, if I was starting in housing in their situation, would I be comfortable living here? If you say yes, Awesome. Treat those places like you want to live. You'll find that you get one less maintenance requests because you just end up taking better care of the property. But two, you get people who love living there who stay there over time, which really gets into the finances. Now it costs so much money to have a vacancy. Let's say rent, and this is low for a lot of places now in the US, but let's say it's $1,000 a month. People will not spend $3,000 to turn a unit. I've seen this happen and they've left it vacant for 6 months, losing $6,000 of revenue. It's not fixed until it's fixed. And when you take these projects seriously, when it's done, it's done. That's true for any other piece of the unit. People will leave if you don't take care of the unit when they're there. So say you have a fridge that goes out and you're slow to repair it. You might lose that tenant. And now instead of spending $200 on fixing a fridge, you're gonna spend a few thousand dollars with 2 months of vacancy. Plus you still have to fix the fridge, 'cause no one's gonna move in with a broken fridge. Just the basic non-slumlordy things are gonna help you more than anything else. Pay attention to your people. Respond to your maintenance requests, maybe not instantly, but very quickly. Within 24 hours, have a response to people. Great communication is everything. Last thing I want to address here, 'cause this is a real problem that Cody and I had. We had recently, if you missed it, a pandemic that shut down everything for 2 years. Don't comment on that. We're not talking about any of our views on what that situation was, but what we do want to talk about is the changes that that made. That trained people that, hey, I may or may not need to pay my rent because I didn't pay my rent for 2 years. You're going to have non-pays, late pays, people who lost jobs because their jobs might have been dependent on physically being in a building. How do you deal with these problems? That has been something that I'm really proud of how we've handled. While we had non-pays that were just people who stopped paying and that was its own problem, a vast majority of them were figured out by talking to the tenant. You can't come in instead of, "Hey, rent's due." We come in with, "How are you doing? Are there any maintenance requests that we need to work on? I noticed that rent has been a little bit late or we're a little bit behind. Is there anything you need help with?" Be a basic human. On a vast majority of our delinquencies, especially over the last couple of years, what ended up happening is we knocked on the door and they said, "Hey, I didn't bring this up because I was just so worried and I don't know what to do." Perfect. Let's work on it. "I lost my job." When do you think you're going to find a new job? It's going to be easier to have a great tenant who's always paid who stopped paying. If they can figure out their situation so we can get caught up, easy. We've offered, "Hey, don't worry about this month for right now. Find a job, figure out your income, whatever it is. Next month, can you meet rent? If yes, let's solve that first. Then we're going to come back and we're going to come up with a payment plan. And we just want to work with you on what is reasonable for you." That is a conversation that we've had several times. Sometimes we have that conversation and they go, "Look, I really can't afford it." I've kind of been hanging out waiting to figure out what to do. I'm just gonna move out. And they've left the next day. You never know what's gonna happen, but most of your problems can be solved without an eviction, without going to war with your tenants. Basic communication is everything. Don't have vacant units, do your maintenance, be great on communication, be a kind but firm human being, and you're gonna do just fine and avoid a vast majority of your vacancy loss. If you enjoyed this video, I'm glad. I have a gift for you guys below. If you click the link below here, there's a free PDF on how we picked up the real estate and managed what we have. It's about 10 pages, you know, talks about what is your goal, how are you going to achieve it, the scripting for owners and brokers, some stuff on basic mathematics. But it's really our guide. We've gave it to you for free. Click that link, download below, and we will see you guys in the next video.