Running a Lease-Up
Running an apartment lease-up can be a daunting task for property managers.
A lease-up is the process of filling a newly built or recently renovated rental property with tenants.
The goal of a lease-up is to reach maximum occupancy as quickly as possible, while also maintaining high occupancy rates and keeping turnover to a minimum.
In this post, we will provide a comprehensive guide on how to effectively run a lease-up strategy, both in an apartment community and multifamily community.
But first, let's discuss how lease-ups can benefit your investment.
How running a lease-up can benefit you as a landlord
Running a lease-up property can be very beneficial for landlords.
Here are a few reasons why:
Increased revenue
The most obvious benefit of a successful lease-up is increased revenue and cash flow.
By filling your property or apartment complex with tenants as quickly as possible, you can start earning rental income sooner.
Additionally, by maintaining high occupancy rates and keeping turnover to a minimum, you can maximize your rental income over the long term.
Reduced vacancy costs
Vacant units can be costly, as they require ongoing maintenance and repairs without generating any revenue.
By running a successful lease-up phase, you or your property management team can reduce vacancy costs and ensure that your property is generating revenue as soon as possible.
Attracting high-quality tenants
Running successful lease-up properties can also help you to attract high-quality tenants.
By understanding your target market, developing a marketing plan, and thoroughly screening potential tenants, you can ensure that your property is being leased to responsible and reliable tenants who will take good care of the property and pay their rent on time.
Building a sense of community
A successful lease-up can also help you to build a sense of community among your tenants.
By creating a positive living experience for your tenants, you can increase the likelihood of them renewing their lease and staying for a long time. This will also reduce turnover and increase revenue.
Increased property value
A well-managed property with high occupancy rates and low turnover can increase in value.
This is particularly important if you're planning on selling your property in the future.
How to Run a Successful Lease-Up
Now that you understand its benefits, let's discuss how to run a successful lease-up period.
Understand your market
Before you begin the lease-up process, it is important to have a clear understanding of your target market.
This includes understanding the demographics, income levels, and rental preferences of the people in your area.
It is crucial to conduct extensive market research to identify the current demand and supply of rental properties in your area. This will give you an idea of what types of properties are in demand, what rents are being charged, and what amenities are most desirable.
Additionally, research the competition in your area.
Look at the properties similar to yours, their amenities, rents, and occupancy rate.
You can use this information to identify what sets your property apart and what you can do to make it more attractive to prospective residents.
Develop a marketing plan
Once you understand your market, you can develop a marketing plan that will attract prospective residents to your property.
This can include a combination of online and offline marketing strategies, such as social media ads, flyers, and open houses.
It is important to create a strong online presence through various platforms like Facebook, Instagram, Twitter, and LinkedIn.
In addition, you can also post online ads on popular rental websites like Zillow.
Make sure to include high-quality photos and detailed descriptions of your property, including the amenities and features that make it stand out.
Offline marketing can include distributing flyers in the surrounding area, putting up billboards and signs, and hosting open houses. This is a great opportunity to show off your property and give potential tenants a chance to see it in person.
Screen potential tenants
Once you have attracted potential tenants, it is important to thoroughly screen them to ensure that they are a good fit for your property. This includes checking their credit history, employment status, and rental history.
You can also ask for references from their previous landlords and ask them questions like how long they have lived there, their rent payment history, any issues they have had with the tenant, etc.
It is also a good idea to require a security deposit and/or first and last month's rent to ensure that the tenants are financially stable.
Sign the lease
Once you have found suitable tenants, it is time to sign the lease.
Be sure to include all necessary terms and conditions, such as rent amount, security deposit, and any rules or regulations specific to your property.
It is also important to explain the lease in detail to the tenant and ensure that they understand their obligations.
You should also make sure that the lease is legally compliant and follows all local and state laws.
Move-in and maintenance
After the lease is signed, it is important to ensure, as property managers, that the property is in good condition for the tenants to move in. This includes making any necessary repairs, cleaning the property, and ensuring that all appliances and systems are in working order.
It is also important to have a plan in place for ongoing maintenance and repairs.
Make sure to have property management teams or a contractor in place that can quickly handle any maintenance issues that may arise.
In addition, you should also establish clear communication channels with your tenants, so that they can reach you in case of any issues or concerns. This can include providing them with a contact number, email, or website that they can use to report any issues or schedule maintenance requests.
You should also make sure to respond to their requests in a timely manner, and keep them informed of any progress or delays.
Another important aspect of move-in and maintenance is conducting regular inspections of the property. This will help you to identify any issues or damages that need to be addressed, and ensure that the property is being well-maintained.
You should also have a process in place for handling move-out inspections and security deposit returns, so that you can quickly and efficiently handle any damages or repairs that need to be made.
Retain tenants
Once your property is fully occupied, it is important to retain your tenants. This can be achieved by providing them with excellent customer service, addressing any issues or concerns in a timely manner, and consistently maintaining the apartment building in good condition.
You should also consider offering incentives or rewards to tenants who renew their lease or refer friends or family to your property.
Additionally, you should also consider implementing a tenant retention program. This can include offering discounts on rent, hosting tenant appreciation events, or providing tenants with exclusive access to amenities or services.
A retention program will help to build a sense of community and create a positive living experience for your tenants, which will increase the likelihood of them renewing their lease and staying for a long time.
Things to watch out for
While running a lease-up can be a great way to fill your rental property and generate revenue, there are certain things that you need to be wary of to ensure that the process goes smoothly, let's discuss these below.
Legal Compliance
It is important to make sure that your lease-up process is legally compliant and follows all local and state laws.
This includes ensuring that your marketing and advertising materials are fair and non-discriminatory and that you are not discriminating against potential tenants based on their race, gender, religion, or any other protected characteristic.
Tenant Screening
While it is important to thoroughly screen prospective tenants, it is also important to be careful with the information you collect and how you use it.
Make sure that you are only collecting information that is relevant to the tenant's ability to pay rent and take care of the property, and that you are not violating any privacy laws.
Maintenance and Repairs
When running a lease-up, it is important to be careful with how you handle maintenance and repairs.
Make sure that you are addressing any issues in a timely manner and that the property is in good condition for tenants to move in.
Be also mindful of the safety and habitability of the property and the local laws about it.
Retention
When retaining tenants, it is important to be careful not to make promises you can't keep or offer incentives that you can't afford.
Make sure that any incentives or rewards you offer are reasonable and that you can actually deliver on them.
Communication
Communication is key when running a lease-up.
Make sure to respond to tenants' requests in a timely manner, and keep them informed of any progress or delays.
Also, establish clear communication channels with your tenants, so that they can reach you in case of any issues or concerns.
Pricing
It's important to set the rent at a competitive rate that appeals to your target market while still providing you with a good return on investment.
Research the market rate for similar properties in your area and adjust accordingly.
Setting the rent too high may result in your property remaining vacant for longer periods, while setting the rent too low may result in you leaving money on the table.
Timing
It's important to time your lease-up correctly to take advantage of seasonal fluctuations in demand.
For example, if your property is located near a college or university, it's best to start the lease-up process in advance of the school year to take advantage of the influx of students looking for housing.
Similarly, if your property is located in a popular vacation destination, it's best to start the lease-up process in advance of the tourist season.
Flexibility
Tenants may have certain requests or concerns, and being willing to listen and make reasonable concessions can help build trust and foster a positive relationship.
Being open to negotiation can also help to fill your property quicker and keep tenants in the long term.
In summary
Running a lease-up can be challenging.
But by following the steps we talked about above, you can help ensure the success of your lease-up and achieve maximum occupancy.
With a comprehensive approach, you can attract and retain high-quality tenants and maintain a profitable rental property.
