How to Boost Rental Occupancy Rate in Multifamily Apartments

The national rental vacancy rate in the United States is just under 7%. If your multifamily apartment’s average rental vacancy rate is more than 7%, it may be time to dedicate the necessary time and resources to boosting your rental occupancy rate. 

Note that some strategies designed to decrease vacancy rates will have an immediate impact, while others will be more of a slow burn and gradually prove their impact over time. 

Understanding Rental Occupancy Rates

The rental occupancy rate is defined as the percentage of tenant-occupied units in your multi-family property. The goal is to reach an occupancy rate of 90% to 95%. 

The vacancy rate is the complement of the occupancy rate. If your property has a 90% occupancy rate, it has a 10% vacancy rate. 

Properties with less than 90% occupancy rates are typically unable to maximize revenue, given that housing vacancies negatively affect net operating income. 

Properties with a 100% occupancy rate can be a byproduct of a thriving housing market, but they, just as likely, can be an indication of underpriced units. 

Average Vacancy Rates Across the United States 

While putting your plan together to improve occupancy rates and lower vacancy rates, keep these averages in mind. This table shows the average vacancy rate across different regions of the United States for the third quarter of 2024.  

Common Challenges Contributing to High Rental Vacancy Rates 

High rental vacancy rates can have a number of culprits. 

As a first step, property owners and managers should track the average vacancy rate and then determine what challenges could be leading to these higher rates. 

One of the most common issues is rent prices that don’t align with the local market. The key is to strike a fine balance between competitive pricing and pricing that reflects the unique value your multifamily property/community offers tenants. 

If vacancy rates have been on the rise, limited amenities, poor reputation, and poor market conditions may be to blame. 

Strategies to Boost Rental Occupancy Rates in Multifamily Apartments

After you have identified the issues that could be impacting your vacant property, it’s time to start building your plan of attack–from marketing to staff training to lease term adjustments. 

Pick a combination of strategies that works for your property, and you’ll be on your way to lowering vacancy rates. 

Aggressive Marketing and Incentives

• Provide a temporary rent reduction for new tenants.
  • To increase urgency, put a deadline on the offer, around two months. 
• Implement a referral program for a rent credit or gift card
• Hire a professional photographer to showcase the property and create virtual tours.
  • Prices typically start around $350 for a virtual tour creation of one unit, but commercial entities can sometimes purchase packages from a photographer to cut down on costs) 

Marketing comes at a cost, but it’s a cost that all multifamily apartments must include in the budget. Anywhere from 2 and 5 % of gross revenue should be spent on a carefully planned marketing plan, especially if the goal is to increase property exposure and leads. 

When marketing, choose your message clearly and ensure potential tenants see the best your rentals have to offer. Once you have hired a professional photographer and/or videographer, consider hiring a branding professional to help improve marketing efforts. Typical rates for freelance branding professionals start at about $75 per hour. 

Targeted Advertising 

• Use Facebook and Instagram to run targeted ads to specific demographics and locations 
• Post vacancies on rental platforms and student housing sites. 

The more specific you can be about your target markets, the easier it will be to fill your vacant units. Target ads to those prospective residents in your city, and use data about your current tenants to learn the demographics and locations of those who will be most interested in renting. 

Spend about 5% of gross potential income on ads each month, and up to 10% on properties in the lease-up period. 

Flexible Lease Terms 

• Offer month-to-month lease options for qualified tenants
  • Even if offered after the initial 12-month lease term 
• Provide fair early termination clauses. 

Another great strategy to decrease vacancy rates is to make lease terms more flexible. A common strategy when renting single-family homes and apartments is to require a one-year lease and then allow month-to-month rentals after the initial year-long period. 

This flexibility in lease terms helps with turnover and even provides opportunities for rent increases in future months. 

Improved Property Management 

• Use a tenant portal like Buildium or AppFolio for maintenance and issues
• Invest in professional development for staff 
• Conduct regular inspections of the common areas

Presenting the best possible image of your multifamily property is crucial for boosting occupancy rates. Beyond keeping common areas clean and updated, consider implementing regular deep-cleaning schedules. Property managers should also conduct regular inspections of the common areas to keep a pulse on the effectiveness of their janitorial staff.

Another option is to stage model units. With the right furniture and decor, prospective tenants can envision their lives living on your property. Staging also gives these leads a better sense of whether their furniture will fit in a particular-size unit. 

Additional Amenities and Property Features 

Simple additions and property upgrades can help both attract and retain tenants. Amenities like high-speed internet packages, increased security at night, dog-friendly common areas, and even Smart Home additions to individual units can win over prospective tenants who are still undecided about your property.

Smart Home additions, such as programmable thermostats and keyless entry, will also give your apartment community a more modern feel. Companies like Samsung and Yale have previous experience working with commercial entities. 

Unconventional Solutions for Boosting Occupancy Rates 

Another creative strategy for decreasing vacancy rates is renting out empty rental units as storage spaces. On the Neighbor.com platform, multifamily property owners can also fill vacant parking spaces with non-resident renters. As vacancy rates decrease, property owners can remove non-resident renters and prioritize renters in need of parking. 

This peer-to-peer marketplace is an especially useful tool for property owners and managers in a lease-up period or those struggling with changing market conditions (that are contributing to a higher rental vacancy rate). 

Should you choose to rent parking spaces and/or empty self-storage units/lockers, you’ll not only boost your NOI, but you can turn these parking and self-storage renters into potential leads. 

Key Metrics to Monitor for Improving Occupancy

As you work on boosting your rental occupancy rates, be sure to keep these key metrics in mind. While occupancy rate and vacancy rent complement each other, tenant turnover and lease renewal rate can tell you a lot about who is staying in place once they have moved in. 

Note that if your turnover or lease renewal rates are high, it won’t matter if you are making progress in finding new tenants who are willing to move in. Your overall occupancy rates will still not improve. 

Final Thoughts 

If you are recovering from issues created by high vacancy rates, always diversify your strategy. Remember, there are other ways to increase income while you await vacancy rate improvements. Use Neighbor to rent out parking spots and increase income while you wait for better occupancy.