Owning a rental property is a great investment, but having a vacant rental property can be risky. When a property sits empty, it is exposed to various risks. These risks increase if you are a long-distance landlord and cannot check on the property regularly.
As a property owner, understanding and mitigating these risks are critical to ensuring the success of your rental property investment.
This article explores the risks of having a vacant rental property and offers practical solutions to minimize these risks, ensuring that your investment remains profitable.
Decreased Property Value
A vacant rental property can decrease in value over time, particularly if it remains empty for an extended period. Neglecting a property can lead to overgrown landscaping, damage to the property's interior and exterior, and an overall decline in the property's appearance.
To prevent a decrease in value, landlords can work with a property management company that regularly inspects and maintains the property, ensuring it remains in excellent condition. Maintaining the property's landscaping and promptly addressing any issues can also help prevent a decrease in property value.
A vacant rental property can attract pests, such as rodents, insects, and termites. These pests can cause significant damage to the property's structure, including walls, flooring, and furniture. Moreover, if left unaddressed, a pest infestation can quickly spread to neighboring properties, causing even more damage.
Sealing all openings, repairing leaks, and removing potential food sources can help prevent pests from entering the property.
Theft & Vandalism
Leaving a rental property vacant can result in theft and damage. Vandalism can take many forms, including broken windows, graffiti, and destruction of the property's interior. Such damage can result in significant expenses for property owners, as they have to pay for repairs and replacements.
Moreover, a vacant property makes it challenging to detect theft and vandalism, as no one on-site monitors the property. This can cause problems when filing insurance claims, as insurance companies may not cover damages that occurred while the property was vacant.
Property owners can install security measures, such as security cameras, alarms, and motion sensors, to avoid theft and vandalism. Additionally, having a property management company regularly inspect and maintain the property can deter criminals.
Squatters Can Occupy the Home
Leaving a property vacant can make it vulnerable to squatters who move in and occupy the property unlawfully. Squatters can be challenging to evict, as they may claim legal rights to the property if they reside there for a certain period. The eviction process can be time-consuming and costly for property owners.
Squatters can also cause damage to the property, such as cutting off utilities, damaging walls, and leaving behind trash. This damage can result in additional expenses for property owners, as they have to pay for repairs and cleanup. Property owners can take preventative measures such as changing locks and securing the property to avoid squatters.
Risk of Fire Damage
A vacant rental property is at greater fire risk than an occupied one. This is because there is no one to detect and address potential fire hazards, such as electrical faults or gas leaks.
Fires can cause extensive damage to the property and surrounding areas and pose a safety risk to neighboring properties and people. Moreover, insurance policies may not cover damages caused by fire if the property has been vacant for an extended period.
To prevent fire damage, property owners can take measures such as ensuring that all electrical systems and appliances are in good working order, installing smoke detectors and fire alarms, and performing regular property inspections to identify potential fire hazards.
Water Damage & Mold
Leaving a rental property vacant can lead to water damage and mold growth. Water leaks can go unnoticed for extended periods, resulting in extensive water damage to the property. This can cause mold growth, be a health hazard for tenants, and be costly to remove.
Property owners should ensure that the property's plumbing system is regularly inspected and maintained to prevent water damage. Property owners can take measures such as repairing all leaks, sealing all openings that may let water in, and regularly inspecting the property for any signs of water damage.
A Vacant Property Means Zero Cash Flow
Property owners do not receive any rental income when a rental property sits empty, resulting in zero cash flow. This can be particularly problematic for property owners who rely on rental income to pay their mortgage or other expenses. Vacant properties can quickly become a financial burden, particularly if they remain empty for an extended period.
To mitigate the risks associated with a lack of cash flow, property owners can take measures such as working with a property management company that can help them find reliable tenants quickly, offering incentives to prospective tenants, and pricing the property competitively.
Insurance Costs May Increase
Leaving a rental property vacant can result in increased insurance costs. Insurance policies for rental properties often require the property to be occupied. When a property sits empty, it is at greater risk of damage, theft, and other risks, which can result in higher insurance premiums.
To avoid increased insurance costs, property owners can work with a property management company that regularly inspects and maintains the property to reduce the risk of damage and theft. Additionally, property owners can ensure that their insurance policies are up-to-date and adequately cover their vacant property.
Owning a vacant rental property poses several risks and challenges for property owners. From theft and vandalism to water damage and mold, the costs associated with a vacant property can be substantial.
However, by taking proactive measures such as regular property inspections, installing security systems, and working with a property management company, property owners can mitigate these risks and ensure their properties remain in good condition.
At SGI Property Management, we understand the risks of owning a rental property and offer comprehensive property management services to help ensure success. Our services include regular property inspections, tenant screening, rent collection, and property maintenance to ensure your property remains in excellent condition and attracts reliable tenants.
Contact us today to learn how we can help you manage your rental property and minimize the risks associated with vacancy.