What to Expect During Rent StabilizationJun 28, 2021
We've already talked about this a little bit already, but we want to discuss what happens when your building is finished... what does that look like? And when can you start renting out your investment property?
These are questions we get all of the time. Maxx Property Management, our preferred management community for each FIG development, has already started to market your property well in advance.
Even before you receive your certificate of occupancy, MaxxPM has your units listed on numerous sites so they can get the word out there that your unit(s) are finished or almost finished. They like to get an early start on this so they can do all they can to get leases signed ASAP. This is something they have a history of doing a great job at.
When your COO (certificate of occupancy) comes in that means your unit is almost finished. Most of the time units are not quite ready. There's still a couple of things that need to happen.
First, there's a checklist that the builder is going to go through and take care of. This will all happen within about a 1-3 week period.
Second, our teams will go in and do a final cleaning on each finished unit.
Once those things happen, your building is officially rent-ready!
When your building is done/finished, it's ready to get leased up. This is where MaxxPM comes in and fills your units. Something they've already started to do well in advance, often months in advance to get the traffic and engagement that they need from potential renters.
Their number one goal is to get through this stabilization period as fast as possible. Investors are looking for their investment property, that they've worked so hard for and they've waited so long for, to get filled and leased up. MaxxPM is on top of this so you can start to receive that cash flow sooner rather than later.
Full transparency: Depending on the project/market, you may have 2, 3, or 4 units that still need to be rented after it's rent-ready. There are usually several other units within your phase of the development that are also getting completed at the same time.
It's unlikely that all four of your units within a fourplex are going to get leased up that first week. You'll want to be patient with property management during this "stabilization period" as they work through getting each unit filled.
Typically, the FIG team will tell investors to plan on a 1-6 month period of stabilization. It's important to have a little bit of a slush fund (money set aside) just in case there's some extra vacancy during the first year of a project finishing/getting stabilized.
Good news! In a lot of our projects, especially recently with rents being in high demand for our floor plans and product type, a lot of FIG units are getting leased up in a short amount of time. We're confident in the build quality and design choices of our team, but it's always good to expect a "worst-case scenario" and err on the safe side. This is why we talk to investors about planning on a 1-6 month stabilization period.