If your tenants' lease is coming to an end and they aren't looking to renew it for another term, you’ll have to find a replacement tenant once they leave.
However, no tenant is going to blindly rent your property. They’ll want to view it before deciding whether or not to sign the lease with you.
When it comes to property showing, you have two options to choose from:
- Wait until the current tenant has moved out; or,
- Show the property to prospective tenants while the current tenant is still occupying it.
As with anything else, there are pros and cons of each option. So, in this post, we will break down the advantages and disadvantages of both to help you make a more informed decision.
Pros of Showing an Unoccupied Rental Unit
Pro #1: You have more time to make the property rent ready.
When a tenant moves out, there are certain things you may want to do in order to make the unit rent-ready. Some of these things may include repainting tired looking walls, having the carpets professionally cleaned, fixing anything that’s broken, or replacing air conditioning filters.
These are things that you may not be able to do when the unit is still occupied.
Pro #2: You don’t have to provide the tenant with a notice.
Before entering the rental property, you have to notify your tenants. In California, landlords must give their tenants a “reasonable notice.” The law states that 24 hours is a reasonable time period.
However, with an empty home, you won’t have to worry about serving a notice. You can just access the unit anytime you wish.
Pro #3: Showing an unoccupied home is less stressful.
When your unit is occupied, you have to worry about coordinating schedules with the tenant. So, with an unoccupied unit, you can have more peace of mind when showing your rental to prospective tenants.
Cons of Showing an Unoccupied Rental Unit
Con #1: It can be time-consuming.
Just because you are showing the unit to a prospective tenant, it doesn’t mean they will rent it. As such, you may end up losing significant time on the property showings before finally landing a tenant.
Con #2: You’ll be operating at negative cash flow.
Even though your property is unoccupied, you’ll still have some expenses to pay out-of-pocket. Such expenses include utility bills, property taxes, and mortgage payments (if any).
Pros of Showing an Occupied Rental Unit
Pro #1: You are still able to collect rent payments.
By showing the unit when it’s still occupied, you’ll be reducing the time it’ll sit vacant. This means that you’ll be collecting rental payments for longer – which is inevitably good for business as you will have consistent income!
Pro #2: No need for transfer of utilities.
When a tenant moves out, you’ll need to transfer the utilities from the tenant’s name to your name. And once you find a new tenant, you’ll need to transfer the utilities from your name to their name.
But with no downtime, it means you won’t have to pay for utilities between tenants.
Pro #3: A good tenant will make the process a home run.
When you’ve got a great tenant in your unit, you can rest assured the home will look its best for the prospective tenant. Your current tenant may also consider leaving the unit while you’re showing it, which can help you control the walk-through.
Cons of Showing an Occupied Rental Unit
Con #1: There is unpredictability.
When showing an occupied unit, you may not know what to expect. If you have difficult tenants, they may live in a dirty and messy rental unit, and that won’t be attractive to prospects.
Con #2: The tenant may not comply.
If the tenant chooses to stay on site, things may get tricky. To avoid problems, consider including a term in the lease that requires the tenant to vacate during property showings. This can save you potential headaches during a property showing.
5 Tips for Showing an Occupied Rental Unit
If you choose to show the unit while it’s still occupied, here are a couple of things you’ll want to consider in order to make the process a smooth one.
1. Prioritize communication.
Let your current tenant know that you will be showing the unit to a prospective tenant. Notify them beforehand on when you intend to do so. You’ll also want to use that opportunity to express any expectations you may have of them.
2. Request the tenant to tidy up their unit.
This is key to ensuring the property showing is a success. Notifying your tenants beforehand will ensure they have ample time to make the necessary preparations.
However, note that the tenant isn’t obligated to comply with any requests. So, if you have a difficult tenant, convincing them to do you a favor may be tricky.
3. Give your tenant ample notice.
A property showing doesn’t waive the current tenant’s right to live in privacy. So, make sure you notify them prior to entering their rented premises. A notice of at least 24 hours will usually suffice.
In the notice, make sure to mention the purpose of the entry, as well as the time of the entry. Of course, the entry time should be within reason. For instance, between 8AM and 5PM on weekdays, and between 10AM and 3PM on weekends.
4. Avoid using “For Rent” signs.
“For Rent” signs can encourage visitors to visit the property unannounced. However, if you feel as though you must place a “For Rent” sign, consider including a brief phrase, such as: “Showing by Appointment Only.”
5. Reward a cooperative tenant.
If the tenant complies with your requests, consider showing your appreciation for them with a gift. For example, consider offering them a gift certificate to a local restaurant or shop.
And if you are considering having multiple showings, then you might want to give tenants a rent reduction for the intrusion on their privacy.
In the end, the success of showing an occupied rental unit depends on the relationship you have with your current tenant. That’s why it’s important to cultivate a good relationship with your tenant!
Evidently, there are advantages and disadvantages of showing an occupied and unoccupied unit – you just need to decide what works best for you!
For more information, feel free to contact Pinnacle Property Management.