Four Ways To Combat Higher Vacancy Rates

If you’ve been a Minneapolis or St Paul landlord for more than ten years, you may vaguely recall a time when duplex vacancy rates were over 6 percent.

To those who’ve been a landlord for less than a decade, that probably doesn’t seem like a lot. In reality, it’s the difference between raising rent and having to offer rent concessions.

Here’s why that matters. According to Northmarq, in the first quarter of 2023, Twin Cities vacancy rates rose to 5.3%.

And if the projected recession ever manifests, odds are they will go up from there.

So what can you do about it?

First, you can improve your property or add amenities like free Internet service. Of course, that costs money, so it may be wise to increase reserves.

An alternative may be to offer a financial concession of some kind. This may be waiving an application fee or even offering a free month’s rent. A bit of advice if you choose the latter path; make it the last month, not the first. Yours truly did the opposite and had to evict the tenant who decided the first month free meant all months were free.

A better way may be to take the equivalent of one month’s rent, divide it by 12 and lower the monthly rent by that amount.

Allowing pets has always been a great way to fill an empty unit as well. Many dog and cat owners have a hard time finding a place to rent. While pets can cause more wear and tear to a unit, simply be sure to collect enough in a pet deposit upfront to offset any damage that may be incurred.

Finally, and only as a last resort, you may need to compromise your stated applicant minimum criteria. Of course, you must comply with state and local laws when it comes to screening, but you may need to be more flexible in your minimum tenant requirements.

While we aren’t in a high vacancy environment yet, it may well be on the horizon. If it comes, (and we all hope it doesn’t), it’s best to be prepared.