The occupancy rate for single-family rental (SFR) homes has been hovering between 94-95%. That’s great news for property managers charged with keeping units full and the rent on time. With vacancies down, that’s more time for other priorities, right? Not so fast. As Andrew Grove, founder and former CEO of Intel famously said, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.”
Okay, that may be a bit over the top, but the business theory has merit. Now is the time to develop a strategy for maintaining those high occupancy rates. Many variables exist today and on the horizon that could create a significant demand shift in single-family rentals.
- Economists predict that interest rates will start their decline in 2024. That may open up the housing market to renters previously priced out of buying.
- SFR rent is up more than 5% in 2023 driven largely by demand outpacing inventory while mortgage rates remain high. As interest rates fall and home prices level off, the ability to consistently raise rent and maintain high occupancy will become more challenging.
- Institutional investors show signs of finally feeling ready to redeploy sidelined capital earmarked for build-to-rent (BTR) homes. That will generate additional inventory—and more competition—in the market for the next several years.
- Today’s renters have options. As workplaces increasingly offer remote positions, more people can live anywhere. They can choose between cities, suburbs, and rural areas. They can change states or get closer to great school systems. They can shop for certain home amenities. Living close to work is decreasingly a factor for today’s renters.
While the market may change, high occupancy rates don’t have to—if you have a plan with “staying power.” Here’s four creative ways to keep SFR vacancies low and tenant renewals high.
- Monitor the Market(s)
Managing single-family rentals (SFR) requires monitoring both the rental and housing markets. Property managers newer to this growing sector may be inclined to follow traditional rental rules: set the yearly budget and issue regular annual rate increases. Maintaining the status quo can create unnecessary vacancies as multi-family rental rates and housing prices both can squeeze SFR. Property managers and owners must ensure their rates stay competitive and reflect the market.
Sometimes the market dictates downward rate adjustments. Slightly less rent is better than a vacancy. Estimates show losing a tenant and replacing them can cost your company between three and five months of rent. Sales data shows the probability of selling or resigning an existing client is up to 70% higher than a new prospect.
An alternative to rate adjustments is looking for incentive opportunities to retain renters. Consider resigning bonuses, non-monetary gifts, and unit upgrades. A study found nearly 30% of renters aged 45 and under are more likely to stay in a rental property when offered an incentive. Updated kitchen appliances (53%) and new flooring (19%) topped the list for most effective upgrades.
If the market shows your rates are too low, assess what other properties are offering to see where you’re missing out.
- Update the Rental Listing
When owning a home was a core part of “the American dream,” listings described how they met a potential buyer’s needs, but heavily featured how they fulfilled a desired lifestyle. With SFR homes now a growing alternative to buying, they deserve the same savvy marketing approach.
Ensure your listing goes beyond the basics. Offer a vibrant description that includes more than the floor plan. Play to people’s senses with eye-catching photography. Call out every upgrade or renovation to the unit. Play up special features like smart home devices, security systems, and home warranties that create conveniences for the renter.
- Communicate, Communicate, Communicate
Apartment complexes usually have a management office on site to help tenants. With SFR homes, the property management company may not even be in the same state. Face time is limited at best. That makes regularly communicating with tenants even more important.
Send update emails and texts. Mail information with helpful home tips. Ensure the renter feels a positive connection to your property management company. Research shows a good communication strategy improves customer satisfaction, boosts client loyalty, and enhances your company’s reputation. Happy renters stick around.
Make regular surveys part of your communication strategy. Actively collect feedback from tenants and share how you’re acting on the findings. Exit interviews also offer a powerful tool for finding issues before vacancy rates creep up.
Monitor and respond to online reviews. You may not always like what you read, but the feedback is important. In fact, four out of five consumers have changed their minds about a purchase after reading a negative review. Addressing them promptly lets current tenants know you are listening and future renters see that you care about doing well.
- Make the Most of Maintenance
When asked what was most important to maintaining occupancy levels, a large national property management company responded “service.” The research aligns with that response showing the top three most impactful day-to-day management practices for improving retention are:
- Maintaining clean, safe units (35%)
- Making continuous facility improvements (32%)
- Offering great customer service (26%)
A Visio Lending poll found that 33% of people choose to rent because they do not want the responsibility of owning a home. They like avoiding the costs and headaches of ongoing maintenance. Having a property manager conducting maintenance is a selling point—unless the company does a poor job. In fact, the root cause of nearly 12% of turnover is unresolved maintenance issues.
Offering a good maintenance process and higher occupancy rates go hand in hand. Renters want a simple way to submit issues, quick resolutions, and quality fixes. Subpar maintenance management has a ripple effect. Property values decrease, vacancy rates increase, and budget projections blow up. Maintenance should be a top priority for any property manager.
Help Your Occupancy Rates with HomePRO
HomePRO Rental Property Protection is a cost-effective way to boost occupancy rates. The industry’s only single-family rental home warranty covers systems and appliances to avoid the costly breakdowns and repairs that frustrate renters. PWSC offers a national network of highly qualified technicians to make each warrantied repair allowing property managers to leave maintenance to the experts.
But HomePRO isn’t just about property upkeep. The rental property warranty can benefit the rent your homes command, serves as an attractive point of differentiation in listings, and offers home maintenance resources to enhance your communication strategy. When it comes to supporting occupancy rates, HomePRO can help.
Learn how HomePRO protects your rental properties—and occupancy goals—with a free quote.