If you’re a multifamily investor just starting out, you might wonder when the best time is to renew leases so you can minimize vacancies.
While tenants move throughout the year for all kinds of reasons, there are certain times that generally make it easier to lease a vacant unit. Planning your lease renewals around those times can help reduce vacancy and make turnover a little easier to manage.
Aim for Summer Vacancies
As a general rule of thumb, you want to try to stagger your vacancies so they occur during the summertime.
There are several reasons why summer tends to be the busiest moving season.
Families with children often prefer to move while school is out, making it easier to transition between school districts. College students may also be moving at the beginning or end of the summer. Even for tenants without children, summer is simply a more convenient time to move because the weather is warmer and many people have vacation time available.
For those reasons, summer is usually the ideal time to have a unit available for rent.
Spring Is the Next Best Option
That doesn’t mean people only move during the summer.
Life happens throughout the year. Someone may get a new job, have a baby, get divorced, or experience another major life change that requires a move.
Because of that, vacancies can occur at any time.
If you can’t line up your lease expirations for the summer months, spring is generally the next best option, especially in the Northeast.
People generally don’t enjoy moving in the middle of winter unless they absolutely have to. Warmer weather simply makes the moving process more convenient.
Consider Charging More for Month-to-Month Leases
Sometimes a tenant wants the flexibility of a month-to-month lease because they aren’t sure when they’ll be moving.
If that’s the case, it can make sense to charge a higher monthly rent.
That additional rent serves as a buffer if the tenant decides to move out at a time of year that’s less favorable for finding a replacement tenant.
The added flexibility has value, and charging a premium helps offset the additional vacancy risk that comes with not having a fixed lease term.
Use Lease Timing to Your Advantage
Whenever possible, think about lease renewals with future vacancies in mind.
If you can position more of your lease expirations during the stronger leasing seasons, you’ll generally have an easier time filling vacant units. When tenants need more flexibility, offering a month-to-month option with a higher rent can help protect you from the increased risk.
A little planning today can make future turnovers much easier to manage.
Final Thoughts
Summer is generally the best time to have lease renewals and vacancies because it’s when many tenants prefer to move. If that isn’t possible, spring is typically the next best option, and charging a premium for month-to-month leases can help offset the additional risk of an untimely vacancy.
Many investors we work with appreciate taking a proactive approach to lease timing instead of simply letting vacancies happen whenever they occur. If you’re looking for investment real estate in Pennsylvania or Maryland, reach out to us. We’re always happy to help.