As a landlord, we deal with a lot of crap.
“I’m sorry – I can’t pay rent, my dog got sick!”
“Can you come fix my sink? I think my hamster is down there!”
“I don’t know why my background report has that robbery charge on there! Wasn’t me!”
However, of all the things we hear from tenants, there is one that’s perhaps the most financially painful two words you’ll hear over and over in your landlording career:
What’s the Big Deal?
You’re probably a bit surprised right now.
Maybe you thought I was going to say something like “&$^# You!” or “Marry Me,” but the reality is, vacancy can be the #1 most costly expense to a real estate investor. A plumber might cost $200, a fridge might cost $500, and an angry tenant might cost you some hair loss – but a vacant unit can cost more than all of this combined.
Yes, a home that rents for $900 a month will cost you $900 a month to sit empty, but that’s not even the bad part. Vacancy is a problem because the expenses associated come from multiple angles. For example, when a property goes vacant, you may need to:
- Remove the tenant’s junk and possibly store it for them on your dime
- Pay a cleaner to make it move-in ready
- Pay a carpet cleaner
- Remodel the property to make it competitive
- Advertise the property
- Pay someone to show it (unless you show it yourself)
- Deal with weird smells
- Pay someone to fix small repairs (holes, etc)
- Pay someone to buy and change the locks
- Add smoke detectors and/or Co2 detectors
- Extermination if they have bugs (fleas, cockroaches, etc)
- Possible evictions (if they don’t move willingly)
- And more.
When I put it all down here on paper (well, virtually anyways) you can see how quickly these costs can add up. A single vacancy for a month may cause $900 …read more