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Why You Shouldn't Show Your Rental Property While It's Tenant-Occupied

Should I Show My San Diego Rental Property to Prospective Tenants While Occupied?

There’s a belief by some in the landlord community that once a tenant gives notice to vacate, you should immediately list the property for rent and start showing it. The idea of course, is you want to limit any vacancy time. After being in this business many years, we have found this is not the best approach. The best approach is to wait until the current tenant moves out and the property is made rent ready before you show it and I will explain why.

Occupied Homes Show Poorly

Have you ever viewed an occupied home? It is hard to picture yourself living there. It is generally messy and you almost never remember the viewing well, since the tenant was there and you felt like you were intruding. Since the property does not show well it usually rents for less then it would if it were vacant and in great showing condition.

You’ll usually attract lower quality tenants as well. The best tenants can rent anywhere, so unless you have a high demand location or a below market rent, the best tenants will pass on your messy, lived in rental. The multifamily industry has done lots of studies on this. That is why apartment communities never show an occupied property.

Success Rates and Occupied Properties

When we used to show occupied homes, we were successful in renting it occupied about a third of the time. That wasn’t due to a lack of effort. The units would not rent because a) we were usually trying for a higher rent b) the tenants were not cooperative with the showings and c) the place was dirty and everything looked lived-in and unattractive.

That means the property sat on the market unrented, which made people looking online assume it was undesirable. We also inconvenienced the current tenant during the process and wasted time and resources that could have be spent managing other issues.

What Can Go Wrong?

Let’s say you lease the property while occupied. There are many things that frequently happen that can cause major issues. A late move out could occur. Your existing tenant might not get their new place on time, so they can’t move out of your place on the date they were supposed to. You really have no leverage to make them leave, so you are at the mercy of their new move out schedule. This means you can’t deliver the property to the new tenant on the date you agreed to in the contract.

Another common issue is repair surprises. You assume it will take about 1 week to make the property rent ready, only to discover a leak under the sink that you didn’t know about and now the cabinet needs to be replaced adding time to your turnover. Maybe the vendors you were counting on to get your home ready quickly, suddenly are not available.

One of the main reasons you don’t want to show an occupied home, is the tenant has no idea what condition they are going to get the property in. They assume everything will be made new and are upset when they move in and find the condition of the home different than they pictured it. There are too many repair decisions, both functional and cosmetic, to adequately go over with a new tenant viewing an occupied home. That is why you only want to show homes in the same condition the tenant will get it in. What they see is what they get. These means less arguments about repairs right after move in, less hurt feelings, happier tenants, and less stressed landlords.

Liability

Showing an occupied property also opens you up to liability. People will be stopping by the property and bothering your current tenant. Bad people can also pose as prospective tenants to case the property and put your tenant at risk. Things can go missing during showings, pets let out by accident, and all sorts things messes can be created.

If showing it occupied was going to get you a better tenant, at a higher rent, and ultimately net you more money overall, it may be worth the risk. Since overall you get less rent and less desirable tenants on average, it is not worth the risk.

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Steve Welty

CEO at Good Life Property Management DRE #01744610

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Hi, my name is Steve Welty. I’m the broker/owner at Good Life Property Management, where we manage single-family homes, condos, and small apartment buildings throughout the Greater San Diego area. The title of today’s video is ‘should I show my San Diego rental property to prospective tenants while it’s occupied’? There’s a long-held belief in the landlord community that once a tenant gives notice, you should immediately list it for rent and start showing the property. You know, I get the thought process behind that, but when you’ve been doing this for a long time, you start to realize that actually the opposite is true and waiting until the tenant moves out is the best approach to net you the most income and have a successful landlording business long term. Let me explain. So waiting until the tenant vacates the property and the property is made ready will usually net you a higher rent amount and get you a better quality tenant. The multifamily industry has known this for a very long time. Think about it, they never show an occupied property. In a best-case scenario where you have a cooperative tenant and the place shows well, yes you can sometimes rent it at a good rate and mitigate any downtime in between tenants, which is the goal, right, to get as much income as possible and a high quality tenant. But our experience running hundreds of units has shown a few interesting things. First, we found we were successful in renting the occupied property about a third of the time, and that was not due to lack of effort. We found out that these properties weren’t renting because the tenants weren’t being cooperative with showings. The places were dirty and they just didn’t show well. They were lived in, it was unattractive. Also, there are so many things that can go wrong when you’re showing an occupied home. You can have turnovers go awry on a regular basis where move in dates aren’t met. And I wanted to give you a few examples of things that can and will go wrong if you show an occupied home. One is a late move out. The tenant doesn’t get their place in time so they can’t move out in time. Not much you can do about it as a landlord when that happens. Repair surprises. The leak under the sink you didn’t know about ends up making you have to push your new tenants move in date back a certain amount of time. Vendor delays. A big one is tenants expecting everything to be made like new. When they go to view a property, have you ever viewed a property occupied by someone else, it’s kind of hard to picture yourself living there and you don’t focus on everything. And so when you ultimately get the property, you expect it will be made like new and you’re sorely disappointed when that’s not the case. Two, you’re usually not going to get a market rent like I talked about. The home’s not going to show well. You’re going to have to settle for a lower rent and a lot of times lower quality tenants because the best tenants can rent anywhere. And third, listing it for rent is more dangerous and opens you up to more liability because people will stop by the property, sometimes people can scout an occupied property and so there’s a lot of things that can go wrong there to watch out for. If you have any questions about this or would like to discuss, please contact us. We’d love to assist you and make it a great day!