My property has been sitting vacant for too long. There has to be something I can do to get it leased.
Some potential problems may be:
• The asking rent is too high
• There's too much competition in the area
• The property needs improvement
• You need help getting it rented
Many investors aren't proactive enough when it comes to getting their property leased. They'll put up a "For Lease" sign or place it on a website or listing service like LoopNet and hope that the phone will ring. They'll let it sit vacant for a while, sometimes months, and then decide I better do something.
Here are some questions you need to ask yourself if you have a property that's been sitting vacant an inordinate amount of time:
1. Is my asking rent too high?
You need to do your homework and find out how your property compares to its competition in your submarket.
If it's an apartment, what are other similar apartments renting for, what's the vacancy rate in the area, what's the competition offering.
If it's retail, office or industrial, it's basically the same process. You want to make sure you're competitively priced and letting the world know you are ready, willing and able to make a deal.
2. What's the competition out there and how can I position my property differently to attract tenants?
Knowing your competition is a critical component of being able to compete in the marketplace. How can you be competitive if you don't know your competition and what they're doing to attract tenants? You can find this out by talking with brokers or calling on the competition and asking what they're offering.
Then you can decide, once you have gathered the facts, what you can do to position yourself in the market to be more competitive. That may be in the form of lower asking rental rates, concessions such as free rent, moving allowance, or whatever else you may come up with to differentiate yourself.
3. Does my property need to be improved to enhance its lease ability?
Sometimes investors "can't see the forest from the trees" and don't notice that their property could use some TLC, like paint, landscaping help, etc. It helps sometimes to have an objective third party opinion as to what they think it could use. Also, drive your competitive set that you’re competing directly with and see how your property stacks up against them. Sometimes it is just a matter of taking care of the deferred maintenance. Don't let that get too far out of hand or the dollars can add up quick.
4. Could I use help in getting it rented?
Many times investors will try to save paying a commission by trying to lease it themselves. While this could possibly work out at times, most times I've seen it work against landlords. I call it "stepping over the dollar to pick up the nickel". Depending upon your property type, where it's located, what your competition is and other various factors that may affect, you may be better off letting a real estate broker help you in getting your property leased. Run the numbers on how much a broker's fee would cost versus how much rent you will need to pay the commission, and you'll see how long it has to sit vacant to pay for it. If it sits vacant too long it becomes stigmatized and prospective tenants will start to see it as a problem property and avoid it. They'll assume there must be something wrong with it for it to sit vacant so long.
In order to find out who could possibly be the best candidate to get your property leased, interview at least three top real estate brokers in your market that specialize in your property type. Ask them what they would do to get your property leased. They'll need an exclusive listing to put the time, effort and energy to market it, if you want them to make a serious effort in getting it leased.
It's important to be proactive when it comes to getting your property rented. After all, it is a business that makes you money, so it makes sense to take it seriously. Do that and you will increase the chances of getting your property leased in a timely manner.
Brian Hennessey is the author of “The Due Diligence Handbook For Commercial Real Estate” a #1 Best Seller on Amazon. Coming Soon - His new book is “The How to Add Value Handbook for Commercial Real Estate” also available on Amazon soon.