With oil prices hovering around the $40 per barrel price point, the Alberta economy has taken a hit. In Calgary this has caused many companies to lay off workers. Many of these workers came from out of province to seek work and are now heading back home. This has caused the Calgary Rental Market to climb from a 1.4% Vacancy rate to a whopping 5.8%. Gone are the Golden Days for landlords when basically all they had to do was put a For Rent Sign on the Front Lawn and it was snatched up quickly. So what now? How do you attract tenants or entice a renter not to vacate? This is where you will need to be creative, but it does not have to cost you a fortune.
1. Current Tenants - If you have a current tenant it is always to your benefit to have that tenant stay as long as possible. It also benefits the tenant in that they do not have to go through all the hassles of moving. So, what do you do if that tenant is moving because he found a cheaper place in the same area? Do your homework. Check to see what the current market rates are and the quality of the current vacancies. Once you have this information you will have a better understanding and can negotiate an incentive to get your tenant to stay put. Incentives can range from free internet, half month rent free, full month rent free. You could even offer them Air Miles. When doing so it is best to look at your current mortgage situation as well. If you are up for renewal you will want to make sure you are showing the maximum rental income possible. So how you create the incentive could play a role.(I will cover this further in my next blog).
2. Vacant Properties - You will now need to compete with other vacant properties. You could hold firm at your price and have your property sit vacant for months. But the better option would be to consider offering incentives with a marginal higher market rental rate. This will most always result in your vacant property to fill quickly and thus reducing potential loss of rent income. As was discussed in the above paragraph incentives could include free internet, free cable, half month off rent or a full month rent free or even Air Miles. What you offer will depend on many factors including the market area and type/quality of the property.
Air Miles is definitely a creative incentive that will not break the bank. At this time only Real Property Management is offering this.
Whatever incentive you decide to go with it. it is always best to discuss them with your property manager and it is never a bad idea to run it by your accountant. Your property manager will evaluate the current market rates, the current vacancy rates and assess your property. Once completed incentives can be recommended. It’s a new day in the rental market industry, make it a good one, for you.