Let Me Think About It

Let Me Think About It
By: Nicholas A. Dunlap

I know, comparing multifamily to industrial is an apples to orange comparison, but in this case it fits. Multifamily mirrors the single-family residential market in that things slow down over the holidays. It is not uncommon for units to sit vacant from Halloween until after the new year if the price is not right. So, when I consult with a mom and pop or other owner of a smaller property, I often advise them to choose between the vacancy or the rent concession. It’s simple. You total the turnover costs and add up the total projected rental income that you stand to lose. Amortize this over the course of a year and decide whether or not it is palatable to concede this amount to the tenant by way of a rental reduction. Is there middle ground? Can you reach an agreement short of the break even point? These are all things to consider. Remember, it is not always an option and is certainly market specific, but it is a viable option for some owners.

This is an excerpt of my recent “Cover Your Assets” column that appeared in the Journal of Property Management.