Owning your primary residence and then renting it out when you move to a nicer place is a solid strategy for building wealth, especially if you’re aiming for early retirement. Over a 20-year career, this approach could help you amass a portfolio of 3-5 rental units, which has been a key part of my retirement planning since 1999. This strategy not only boosts your income but also gradually upgrades your living situation. However, it’s essential to manage this growth responsibly, without overleveraging yourself.
From my experience as a landlord since 2005, I’ve learned that finding tenants can be easy or hard depending on the timing. The hardest time to find renters is in the last quarter of the year—October through December. This is when families with children are least likely to move due to the school year starting in August or September. Additionally, by the fourth quarter, many potential renters who are graduating or starting new jobs have already settled into their new homes earlier in the year.
If you find yourself needing to rent out your property during these months, you might have to lower your rent or wait longer to find tenants. Conversely, the best months to find tenants are April, May, and June. This is when the school year ends and families are looking to move before the next school year starts. This period also aligns with new graduates starting their job hunts or relocating for work.
The second-best time for finding renters is the first quarter of the year—January through March. Although it’s a quieter time for relocations, the new year can inspire people to pursue new beginnings and changes in their living situations.
Running a rental property comes with its challenges. Every month a property remains vacant, you lose potential income. However, the risks of rushing and choosing a problematic tenant can outweigh the costs of a short vacancy. Properly screening tenants and perhaps offering incentives to extend their leases through quieter rental periods can mitigate these issues.
I also discovered the joys of having an empty rental during the typically tough rental months of October to December. It provided a perfect opportunity to make improvements to the property at a leisurely pace while settling into a new home myself.
Ultimately, understanding the seasonal patterns of tenant movements can help you align your rental activities with the most advantageous times of the year, reducing stress and increasing profitability. Always aim to synchronize lease terms with these optimal periods to avoid the pitfalls of off-peak tenant hunting. Remember, good timing, thorough tenant screening, and strategic planning are crucial to maximizing your rental income and achieving long-term success in real estate investment.
