Risks of Having a Vacant Rental Property

Kevin Quat • October 18, 2024

When done right, an investment property offers property owners and investors a consistent income stream and also acts as a shock absorber during financial shocks.

All these advantages that come with rental properties work with the assumption of full occupancy. Having a vacant rental unit on your property comes with a set of challenges and risks.

To know more about how to mitigate the issue of vacant rental units, the team at AIM Real Estate Management has provided this guide on the risks vacant rental properties pose to landlords.

1. Loss of Rental Income

The most obvious risk that comes with a vacant unit is the lack of financial security. A fully occupied rental property offers its owner a steady income stream. One can plan their monthly expenditure and make future financial plans.

A vacant unit represents a loss of income. This will affect your ability to cover your property costs such as property taxes, mortgage repayments, and the cost of maintaining your property.

How do you mitigate this? As an investor, you should create an emergency fund for yourself. Have a ready fund that can meet your costs and expenditures at such a time. We recommend that property owners implement customized and appropriate marketing campaigns. This will ensure that you have a pipeline of ready tenants who want to lease your premises.

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2. Potential for Vandalism and Property Damage

With your property occupied, the tenant will be able to take care of the property as per the lease agreement and local laws. In addition, an occupied unit keeps away vandals and thieves who would take advantage of the situation.

A vacant unit can attract thieves who’ll steal valuable assets such as the furniture, fittings, and electronics. If you have a vacant unit, it would be ideal for you to install a security system and alarms on your property. You can also conduct regular drive-bys and visits to the property.

If you have multiple properties and are unable to visit all the properties at once, consider hiring the help of a local property manager. They would be able to oversee your property’s security.

3. Squatters

Squatters are a big concern for any property owner with vacant units. They can come in droves, occupy the property, and potentially pose financial, safety, and legal risks to you once they have set up camp.

Not only will you lose income, but there is always the possibility of property damage. Should they light a fire and graffiti the walls, these are extra costs that you will have to incur. There is also the legal to consider. You’ll have to ask for the help of a legal professional to remove them from the premises.

To mitigate the risk of squatters moving on your premises, you’ll have to reduce the possibility of entry. Ensure that you have strongly secured all entry points to your home. Also, monitor the property regularly while checking for any signs of forced entry. Should any squatters move in, move swiftly to legally remove them.

4. Property Depreciation

Investors in property usually enjoy appreciation in value. This is because of increased demand, inflation, and the slow responsive nature of the property market. A property’s value can also decline, depreciation.

Due to property damage, lack of upkeep, or the presence of squatters, the value of your property can decline steadily over time and cause you to lose out on long-term tenants.

The decline in real estate value can be deterred by keeping your property in good condition and high demand from potential renters. We also ask landlords to stay in touch with market trends and preferences. Investment in new equipment and consistent renovations will improve demand over time and have a positive impact on its value.

5. Legal Liability

Even without a tenant on the premises, the owner of the premises is still liable for accidents and injuries that occur on the property. This applies to illegal occupiers of your premises such as squatters.

It would be in your best interest to secure all entry points and keep squatters and other illegal occupiers away from your rental units. You should also have a comprehensive insurance package that covers such scenarios.

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We understand that some landlords might not have full understanding of the law. It would be good to consult a property company with the knowledge and expertise to help you during such times.

Conclusion

The challenges of rental property ownership come in various shapes and sizes. At times, landlords find themselves in deep waters without the expertise to handle the problems. Working with a reputable property management company at such a time can serve you well and ensure the smooth operation of your rental properties.

Are experiencing challenges managing the needs of your rental property? You need an experienced and talented expert with local knowledge to help you. Look no further than AIM Real Estate Management!

We’re a full-service property management company with years of experience in the local market. Our company takes great pleasure in offering comprehensive solutions that meet the needs of our clients.

AIM Real Estate Management also works with reputable contractors and tradespeople to ensure every element of your property is in the best condition. Get in touch with us today and receive a quote for our professional services!

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