It is a common assumption that unoccupied or vacant property does not require property management. This assumption is based on the fact that in uninhabited spaces such as rental properties, there are no tenants to be handled. However, this speculation is false.
Unoccupied or vacant properties, just like occupied spaces, require property management. It is also worth noting that there is a distinction between unoccupied and vacant property, even though these two terms are often used interchangeably.
How is an Unoccupied Property Different from a Vacant Property?
An unoccupied property is one that lacks inhabitants but still contains functional furniture. It is usually just a matter of time before this kind of property gets new tenants. Distressed property may be classified as unoccupied property.
On the other hand, a vacant property is a property that lacks both inhabitants and utilities such as furniture. In other words, these units are sometimes empty and deemed abandoned. However, newly constructed properties waiting to be rented out or sold may fall into this category.
Some states require vacant properties that remain unoccupied for more than a month to be registered as unoccupied. Vacant property registration is a form of rental home management. The aim of this registration is to curb neglect of vacant property by its owners or listing agents.
However, a vacant rental property owner, under some circumstances, can be exempt from vacant property registration. To get this exemption, the owner should actively advertise this vacant property as proof that they intend to generate rental income from it, in the foreseeable future.
Any uninhabited property, whether vacant or unoccupied, requires vacant property management. This applies to all rental properties, which are divided into residential as well as commercial properties. What does vacant property management entail? Property owners may ask.
Is Vacant Property Management Essential?
As a property owner, it is likely that you do not reside in close proximity to your vacant or unoccupied property. As such, nobody is present to inspect the house regularly and ensure that it is in proper condition and ready for potential tenants at any time.
This is quite risky for property owners and real estate parties such as listing agents. How so? If you have a vacant home, this property is prone to risks such as:
- Electrical defects
- Infestation by pests
- Water leakage
- Fire breakouts
- Vandalism
One of the ways to mitigate these risks is to hire a property manager, either in the form of an individual or a company. Property management companies take up administrative duties related to industrial, commercial, and residential property, on behalf of landlords.
When dealing with inhabited rental property, collecting monthly income from tenants is one of the property manager’s roles. During the oversight of vacant rental property, some of the property managers’ responsibilities include:
- Conduct routine interior and exterior property inspections to point out any faults.
- Conducting property maintenance such as servicing pipes and taking care of the lawn.
- Instantaneous monitoring of the property, to counter cases of vandalism such as theft. Installation of surveillance cameras should come in handy in this regard.
Nonetheless, liaising with a property management company is not a guarantee that your vacant or unoccupied property is completely safe from risk. Hence, the need for insurance. Vacant property insurance may be a familiar concept to individuals fully immersed in the investment property business such as real estate investors, but remains foreign to many property owners.
What is the Purpose of Vacant Property Insurance?
The objective of this insurance is to shield property owners from losses incurred from damage such as fire, caused on their vacant rental property. Property owners can purchase this insurance independently or it can be added to an existing insurance policy for the homeowner.
These policies cover common perils such as lightning which might impact a vacant rental space even when under the watch of a dedicated property manager. However, risks such as earthquakes may need separate cover especially if the property is located in an earthquake-prone region.
As a means to safeguard your vacant or unoccupied property, whether you opt for property management or insurance, or a blend of both, it is worthwhile. If the vacant property gets tenants, you are assured of stable cash flow from rental income.
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