Why Some Landlords Keep Their Apartments Vacant on Purpose

When a homeowner takes a vacant apartment off the market, the homeowner loses income. A potential tenant is denied the opportunity to move into a new home. Both parties suffer a loss.

This article explains how and why this situation occurs.

Barbara is a single, retired homeowner with a two-family house. She lives in one apartment and has kept her other one vacant since 2007. She never intends to rent it out again.

She says she used to rent it out, but always had trouble with the tenant. On one occasion, she rented the apartment to the friend of a close friend of hers. The family was moving to the Boston area and needed a place to stay when they arrived. Barbara agreed to rent her unit at $950 a month for a large six-room apartment. The average rent at that time for a two-bedroom apartment in Boston was over $1,200 per month. The family arrived the very next day.

Barbara says it was the worst decision that she ever made. After paying the first month’s rent, they never paid the rent on time. They always asked her to make damage repairs. When she asked for the rent she says, “They always looked at me like I was crazy.”

Another Experience

Barbara is not the only homeowner who refuses to rent out her vacant apartment. Another homeowner has left her apartment empty for 10 years because she got tired of being burnt by tenants. She says the amount of damage and aggravation she experienced by irresponsible tenants was not worth renting it out.

Warehousing an Apartment

Many homeowners who can afford to do it warehouse their units. Warehousing is a homeowner or corporation that deliberately fails to re-rent a vacancy. Some real estate investors purchase a building and keep it vacant in order to have vacant units to convert the property to cooperatives or condominiums. Some homeowners who want to sell and make their house more sellable will keep their units vacant to make it more attractive to a buyer.

Refusing to rent out a vacant apartment is not a frivolous decision for a homeowner. There are bad tenants who spoil it for all the good tenants. Even if the mortgage is paid up, homeowners still have expenses for their property. The belief that it is less expensive to keep an apartment vacant rather than spend thousands of dollars in repairs, and risk damages, vandalism, hiring contractors, illegal activities and unpaid rent by a bad tenant is a strong motive for certain homeowners, and is not entirely unfounded.

There Really are Vacancies Out There

In any given city, a vacancy shortage may not actually exist. There are probably hundreds of vacant apartments. Available apartments go unrented because the owners have decided to keep their units empty for the foreseeable future. They don’t need the rent or the potential bad tenant aggravation. And it is not illegal to keep an apartment off the rental market.

So, why do landlords allow perfectly good apartments to stay empty on purpose?

Unpaid or Late Rent Payments – The owner needs the rent on time every month and in full in order to help pay the mortgage or building expenses. When a tenant regularly pays the rent late or not at all, it disrupts the homeowner's personal money and credit rating. Taking legal action every month in anticipation of an eviction is time consuming and a drain on personal income. If the tenant is having financial problems, so are you. If the homeowner is able to consistently pay the mortgage without getting rent every month, why have a problem tenant?

Illegal Drugs and Excessive Traffic - A homeowner with a tenant involved with illegal drugs is a big problem. The loss of rent, the documentation of the problem, the calls to police and the excessive traffic all contribute to aggravate the homeowner.

If the homeowner lives in the same building, a tenant drug problem is dangerous to his or her family and friends. Whether selling or consuming, a building involved with illegal drugs gives the property a bad reputation. Neighbors have been known to confront a homeowner about the criminal element on the street and will often demand immediate action.

Homeowners spend hundreds, if not thousands of dollars evicting a bad tenant. Then they suffer the expenses of lost rent arrears, current rent losses, fixing up the apartment again, and re-renting the unit. If the homeowner has done this at least twice in the lifetime of owning a property, it’s easy to see why he or she would be reluctant to rent it out ever again.

Legal Expenses – The owner has to send the tenant an eviction notice every month because the rent is consistently late. Paying an attorney to do a formal eviction could run into a good amount of money. A really bad eviction could cost thousands of dollars on lost rent, legal fees, and warehouse fees to remove the tenant. It wipes out the owner’s savings. An apartment stays empty because the owner is too afraid that another bad tenant will further sap their finances.

Maintenance Expenses – Owning a residential property has on-going demands. Maintenance expenses can be exacerbated by tenants who abuse the property. If evicted, tenants have been known to tear up the apartment before they are forced to leave. Here is a short list of maintenance expenses that a bad tenant could cause:

• Keep the front door unlocked or broken
• Broken or missing window screens
• Numerous and various toilet expenses, i.e. overflows, toys, diapers, etc.
• Excessive use of heat or water, both included in the rent
• Holes in the wall by children or other parties
• A stove ruined by excessive grease and lack of cleaning
• Pest infestation from the tenant’s lack of cleaning and food/trash disposal

The Lack of Privacy - If the owner lives in the same building as the tenant, he or she gives up some level of privacy. Barbara the Homeowner says that since she stopped renting her vacant apartment, she enjoys being the only person in her two-family house. It’s quiet, and she doesn’t have to worry about security issues.

Once the unit is empty, the owner discovers that privacy and peace of mind is restored. If the owner can afford it, the decision to leave an apartment empty is an easy one.

General Aggravation – A landlord gets to hear every excuse in the world as to why the rent will be late. The owner has had so many negative encounters with one tenant after another that he or she just says, “I’m done. I’d rather leave the apartment empty than deal with the aggravation.” The owner decides to live a less complicated life.

There is no way to know how many vacant apartments exist in a city for the reasons above. Homeowners aren’t going to report their empty units. A landlord’s negative experience of one or two bad tenants is financially and emotionally draining. For some homeowners, it only takes a few bad tenants to ruin it for everyone. Once or twice burned, there may be no argument strong enough to convince a homeowner to re-rent their vacant apartment.