Mitigating Vacancy Risks: Best Practices for Chicago Multi-Family Investors with Abe Eilian

Mitigating vacancy risk in Chicago multifamily properties is a critical aspect of property management that ensures sustained revenue and long-term property value. In Chicago, a city known for its diverse neighborhoods, the rental market is highly competitive. Understanding the dynamics of tenant turnover, seasonal leasing trends and strategic property management can significantly reduce vacancy periods. Below are effective strategies to help you mitigate vacancies in your Chicago multi-family properties.

1. Leveraging Prime Leasing Season: Historically, Chicago’s prime leasing season has been in both the spring and fall. However, contemporary trends indicate a noticeable shift towards spring and early summer as the optimal leasing periods, while fall has become somewhat less consistent. Aligning your lease end dates to conclude between the months of April and July is essential. This may require signing a lease as short as 6 months or as long as 18 months, in order to shift to the optimal leasing cycle, but it is well worth the effort. By focusing on this peak leasing period, landlords can reduce the likelihood of prolonged vacancies, as well as achieve top of market rents.

2. Requiring 60 Days Notice from Tenants: Implementing a policy requiring tenants to provide 60 days notice with their intent to renew or vacate is imperative for maintaining occupancy levels. This advance notice gives landlords ample time to market their unit, as well as strive for top of the market rents, and it also provides owners enough runway to adjust the asking rent over the coming weeks, if needed. Further, it allows for better planning and scheduling of any necessary maintenance or upgrades between tenancies. By having a clear understanding of upcoming vacancies, landlords can proactively manage their properties and avoid the financial impact of unexpected turnover. This policy ensures a smooth transition between tenants, minimizing the time a unit remains empty.

3. Understanding the Market: Understanding your hyper-local real estate market is key. Chicago’s multifamily properties are spread across distinct neighborhoods that vary significantly in terms of demand, rental rates, and tenant demographics. Regular market analysis of on-market competing rentals, as well as recently rented “actual rents” helps property owners stay informed about trends and changes. Tools like neighborhood surveys, market reports, and competitive analysis provide valuable insights into rental demand and pricing strategies. This allows owners to set competitive rental rates, which is critical in attracting and retaining tenants. Overpricing (when not having enough runway to test the market) can lead to prolonged vacancies, while underpricing may diminish profitability. Regularly reviewing rental prices in the immediate vicinity and adjusting rates in line with the market can help maintain occupancy levels.

4. Effective Marketing: The days of renting apartments by simply placing a For Rent sign in front of your building are long gone. Effective marketing strategies are vital for filling vacancies quickly, and at top of the market rents. Utilizing inexpensive and user-friendly online platforms, such as Zillow, Trulia, HotPads, Apartments.com and Craigslist can increase reach and visibility significantly. Further, investing in professional photos is well worth the cost and provides a high ROI. If your tenants have tastefully furnished their apartment, it is prudent to get their consent to photograph their unit before they vacate. This serves as cost-effective staging and the photos can be used for years to come.

In conclusion, mitigating vacancy risk in Chicago’s multifamily properties requires a strategic approach, particularly during the prime leasing season. Requiring advance notice from tenants, proactive marketing and competitive pricing are all essential components of a successful strategy. In a dynamic and competitive market like Chicago, property owners must be prepared to effectively capitalize on the heightened demand during prime leasing season. By doing this, property owners can maintain high occupancy rates and ensure financial stability and profitability over the long-term.

For assistance in determining the market rent for apartments, reach out to Abe Eilian for a neighborhood survey and competing rental analysis.