The best and worst times to find tenants for more cash flow

One of the most efficient ways of building semi-passive income is to own your primary residence, live in it for a few years, then rent it out and buy a nicer property. If you intend to retire early, you can easily build a rental property portfolio of 3-5 units over a 20-year career. This has been an integral part of my early retirement plan since 1999.

Not only does this strategy generate more semi-passive income, it also allows you to climb the real estate ladder and eventually live in a nicer house. However, it is important that you do so responsibly, as opposed to taking all the equity in your multiple rental properties and buying one premium place.

During my transition from buying a new house to renting my old one, they consistently found tenants within a month. This time, however, it took four months, which was attributed to bad timing, poor planning and indifference.

For those of you looking to own rental properties, let me share the best and worst times of finding tenants. I have been a landlord since 2005 and want to invest more passive investment in real estate as i get older

Worst time of year to find tenants: October, November, December

The most demanding period for securing tenants falls in the fourth quarter of the year: October, November and December. This difficulty is exacerbated when trying to rent a family home to families with children.

The main reason for the difficult task of finding tenants during these months is that most people don’t want to move unless they have to. School usually starts in August or September and requires parents and students to secure housing before those months.

Graduations for students are normally held in May or June, with job offers usually materializing in July or August. By the time the fourth quarter arrives, a significant portion of potential tenants will have already found housing.

If you are looking for quality tenants during the fourth quarter, you may need to extend your wait time or consider lowering your asking price. For tenants looking for a place in the fourth quarter, there may be an opportunity to negotiate a better deal, but the available rental inventory is likely to be more limited.

For those who want to buy, the best time of year to buy real estate is also during the fourth quarter. Sellers who list during this time are generally more motivated.

Best time of year to look for tenants: April, May, June

The optimal period for securing tenants is April, May and June. The second quarter of the year sees increased planning and movement due to the end of the school year and the start of summer vacation.

Families with children, especially those who want to minimize disruption during the school year, prefer to find a rental property and sign a lease that begins the month school ends. This strategic timing allows families to use the summer for the moving process, including moving, unpacking, furnishing and decorating, before the new school year begins in August or September.

In contrast, new college graduates looking for housing don’t face the same level of urgency, but it still exists. They may choose to live with their parents for the summer before they go on their work trip, delaying their search for rental properties until July or August.

Alternatively, they could choose to take a last summer vacation to explore the world, similar to my experience with my trip to Japan and Taiwan in 1999 before I started working at Goldman in August 1999.

Second best time to find tenants: January, February, March

The second best time to look for tenants is January, February and March, i.e. the first quarter of the year. The onset of a new year often triggers new beginnings for individuals, as some may seek new jobs, move to other cities, change neighborhoodssave money or make changes in your relationships.

While fewer people typically move during the winter holidays, the post-holiday period often sparks new motivation to improve one’s life. All of my new tenants were residents of sleepy Santa Clara County, located about an hour south of San Francisco. In their twenties, they were looking for a more dynamic lifestyle and eagerly dove into it the excitement of living in a big city.

Among the three months of the first quarter, March is proving to be more favorable for finding tenants compared to February, with January being the most challenging of the three. The closer you get to the second quarter, the perfect time to look for tenants, the better.

Best (Worst) Months of the Year to Find Tenant(s)

Calling property owners to rent

Every month that a rental property remains unoccupied represents a loss of potential income. Even if the property is fully paid off, there are property taxes to cover. Therefore, it is in the landlord’s best interest to secure the most suitable tenants in the shortest possible time.

However, the consequences of a problem tenant can far outweigh the costs associated with keeping the property vacant until the ideal tenant is found. It is crucial to carefully screen each tenant, engage in discussions with their previous landlords, obtain evidence of employment and financial stability, and create solid lease.

If you find that your tenants want to move out at the end of the third quarter or during the fourth quarter, which are the worst times to look for new tenants, it may be strategically necessary to encourage them to stay at least until the new year. The incentives for such an arrangement can be beneficial to both parties involved.

The joy of a vacant property for rent

While finding suitable tenants proved challenging during October, November and December, I found solace in an empty rental house. This period allowed me to make the necessary improvements, including repairing the internal and external walls and replacing some rotten decking from my handyman.

October was an extra busy month as my family just moved into our new house. Unpacking, setting up systems (wifi, solar, cable, ecology, etc.), buying furniture and decorating took up our time. Having an empty rental property provided an opportunity to improve its condition at a relaxed pace and focus on our new home.

I even converted our old property into a rental wellness center for one daywhich after seven years of raising young children offers welcome relief to calm the nerves and rejuvenate the mind.

After three months of not renting the property, a a sense of economic urgency it made me reevaluate his condition. Although I considered keeping the house empty for personal retreats or accommodation for extended family members, the cost was too high.

In the end, I decided not to sell because I expect another boom in real estate prices in San Francisco due to the growth of artificial intelligence. Therefore, my best option was to rent it.

How we minimized disruption to our children with off-cycle movement

Although we stated that October, November and December are the least favorable months for finding tenants, we decided to move in October. Our children have already started going to school. Here’s how we’ve managed to minimize disruption.

Our new house is only 0.5 miles away from the old one, which ensures that the commute to school will remain virtually the same.

We decided to move on Friday morning after I brought both kids to school. We then arranged for the movers from 9 a.m. to 4 p.m. By the time I brought the kids home, all of our things had been moved to the new house.

Crucially, our children were familiar with the new house, having visited it at least 15 times in the 18 months before we bought it. Escrow Closing Delay he also gave us more time to prepare. We viewed the home as a family in May 2022 when it first came on the market. This gave them plenty of time to explore both the interior and exterior, accumulating at least ten hours of familiarization before moving.

In preparation for the move, we talked with the children about where they would like to sleep and how they envisioned the arrangement of the furniture. In addition, my wife took the time to decorate their new rooms with their old wall decorations to make their rooms feel like home.

The 18 months it took us to complete our home purchase added significantly to our comfort level when we finally moved. By then we were all mentally prepared.

A natural return to the optimal rental cycle

While the worst months can present problems in finding tenants, there is an opportunity to naturally return to the cycle of securing good tenants during the better or best months.

For example, if you struggled to find tenants in October, November, December, and January, but finally succeeded in February, you are now operating on a February-to-February cycle, with a typical one-year lease followed by a month-to-month arrangement. You probably won’t need to find tenants again during the fourth quarter.

Nor is the likelihood that your tenants will move out exactly one year later guaranteed. In fact, they can move in April, May or June, which is prime time to look for tenants because it corresponds to when most people move. Basically, once you have tenants, you can naturally sync up with the best cycle for finding new tenants.

Human behavior often follows a pattern similar to how people tend to commute between 8:00 a.m. and 10:00 a.m., resulting in intense rush hour traffic. Similarly, there is a tendency for people to have lunch between 12:00 and 13:00, causing long queues.

Modifying these routines by just 30 minutes could save significant time, but people often resist making changes even though it could improve their situation.

You should plan better to get tenants

I didn’t expect it would take me four months to get new tenants. My timing of finding new tenants along with my overall sense of urgency was off. In the beginning, maintaining stability was a priority over cash flow.

Additionally, the more expensive a house is to rent, the more difficult it can be to find tenants who can afford it pay six figure rent. As a result, the “sales cycle” tends to be longer.

As you get older and hopefully accumulate assets, there may be a tendency to be less proactive in finding new tenants. In my 30s, new tenants often started the same week the old ones moved out. Not so much today.

After this, no more physical properties for rent

I want to invest more at this stage of my life private real estate funds with my incremental cash flow. However, I found myself managing another rental property because I couldn’t resist buying the nicest property I could afford while my kids were still living at home.

While owning rental properties is one of the best paths to financial independence, being a successful landlord requires careful planning and effort. There may be luck that the tenants will not be heard, but these quiet periods will inevitably not last.

Good luck finding tenants for your rentals! I hope you learn from my experience and increase your rental income over time.

Questions and recommendations from readers

When do you think is the best time to look for tenants? Have you ever deliberately given up rental income in the hope of finding better tenants? If so, how did you decide when is the right time to act?

If you want to own rental properties without being a landlord, take a look Fundrise. Fundrise primarily invests in residential and industrial properties in the Sunbelt region, where yields are higher and valuations are lower. In total, its private funds manage more than $3.5 billion of equity capital for more than 500,000 investors.

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