There’s one final element to this process of showing prospects units and getting them to rent with you – that is handling deposits and waiting lists. This is a process I have seen handled in a variety of different ways at properties, and is something you may or may not need to use in your arsenal. There are two reasons for deposits and waitlists…
Pretty much every rental lease includes a security deposit of some sort, but the kind of deposits I’m talking about are for holding available units off the market. There are a number of situations where this may happen, including someone wants a unit but can’t quite afford the full deposit/movein cost at that time (but they will in a week for example), or they really like the apartment you have but also want to consider other possibilities.
The ideal situation, as we know, is that when you have a vacancy, you immediately find a candidate that hits all of your desirable traits, they see the apartment and decide on the day that they will take it – a lease is signed and boom, you have filled a vacancy with minimal effort and time. What happens if you have long stretches of vacancy?
Let’s consider the first situation. You have a prospective tenant who has seen the available unit, they like what they see and everything checks out on your end. You move to offer the lease, but it turns out your property their 100% ideal choice – they have another rental property they are looking at but may not receive. In this case, you can offer to take a non or partially-refundable holding deposit on the unit. Your goal here is to make sure you don’t lose money by taking a vacant unit off the market, but also to apply a sense of investment within your prospect.
To be more specific, when you offer to take the unit off the market for a nominal deposit, you appear to be helping them out (which you are) but in addition your prospect is going to be putting money into the unit – thus when the time comes for decision, they will be motivated to not lose this money.
Either way, be sure to not have your vacant unit off the market for more than a couple days – the longer it sits there, the less likely those prospects will lease with you and the more you lose when you end up having to put it back up on the market.
The second situation you are likely to need to use deposits and waiting lists is if your property is located in an area which is heavily affected by seasonal traffic. One such situation that comes to mind is college towns – where summer time periods can result in large amounts of move-outs and extensive periods of vacancy. In those situations, some property managers will begin to create waiting lists for the approaching vacancies – before all the units are available.
You can really only do this effectively if you have kept good track of your property’s performance over the year and can reliable predict when move outs are going to occur – coupe this with having good advanced communication with tenants and you can minimize the length of vacancy.
The deposits come into play when – in the above situation for example – you have people who are looking to move not presently, but in the near future (the fall for example). In this case you can reliably secure the future occupation of a future vacant unit by accepting the security deposit in a non-refundable form.
In all of these cases, holding deposits and waiting lists are only tools you use when you have no other choice – when you have periods of mass vacancy or when you have the perfect tenant on the fence and want to tip them to your side. Use with caution!