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Extended Vacancies

Written by Wil Whalen, Spectrum Enterprises

A very common issue on a tax credit property is extended vacancies.  This is when a unit has been vacant for more than four months.  We are not concerned with market units, but units that are rented solely by the property management staff in the Low Income Housing Tax Credit program.

Here are the most common reasons for an LIHTC unit to become an extended vacancy:

  • The applicant has a criminal background.
  • The property is in an undesirable area.
  • In the case of single room occupancy buildings, often people won’t take the units because they are too small.
  • The applicant is not income qualified.
  • The applicant has bad credit.
  • The property has to work with an external organization on the wait list and the verification process.  Often this is a housing authority that maintains the wait list.  We understand that is can often add several months to the application and verification process.

These are all valid reasons for a unit to remain vacant for an extended period of time.  However, you should still be working to rent these units.  In the case of working with the housing authority, there isn’t much you can do to expedite the process, but it’s still important to ensure that these units are ready should an income eligible tenant apply.

Here are some tips for renting the units with extended vacancy status:

  • Make the unit rent ready as soon as possible after it has been vacated.
  • Aggressively market your property in local news publications, with the housing authorities, on the internet and in apartment rental guides.  Some properties go to the extent of putting a large banner on top of the building advertising vacancies.  Other properties conduct open houses on weekends to show the units and the property.
  • Show the potential applicant the unit prior to the application process.  This way if they’re not interested they can opt out before you spend three months verifying their income.

A few what “not” to do with extended vacancies:

  • Do not use a vacant unit for storage.
  • Do not use a vacant unit for “spare parts.”  If a unit needs a new refrigerator then buy one, Don’t take one out of a vacant unit, because that renders the unit uninhabitable.  And no one wants to see a unit missing a major appliance, light fixtures, or a toilet.  Always be sure your vacant units are rent ready.
  • Do not neglect the safety features in your vacant units.  The smoke and CO detectors should be operable at all times.

Extended vacancies will always be an issue for some tax credit properties.  What’s important is that at any given time, the management staff can show that they are not only aware of the extended vacancies, but they are working hard to rent the units.

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