15th December 2013 by Simon Misiewicz
Do you have voids in your property portfolio?
Are you actually making the Return on Investment (ROI)?
Voids are periods of time that your property remains vacant. If your property is vacant then you will not be collecting rent and your asset can become a liability. We will go through some of the reasons why voids take place and what can be done to minimise the impact of your property financial performance.
Voids take place when:
– A tenant leaves and the property needs maintenance work
– A property is over priced
– The property is not of a good standard
– The property is no longer in a desirable location
– The property is not being advertised properly
As you can see, there are many reasons why a property can be vacant. There may be even more reasons but in my experience these have the biggest impact on my property portfolio. There are some simple and quick fixes that you can implement to minimise voids.
– Maintenance work can be scheduled on the same day or soon after a tenant leaves. It is imperative that maintenance work is not delayed. It is not the cost of maintenance that is the only consideration but the number of days that the property is left empty. Make sure that you know that the trade person will do a good job and that they will be on time. The amount of hassle that I had in the past by using the wrong people have significantly delayed my maintenance work.
– I have been guilty of over pricing a property and as a result it had been left empty for three months. Here are the details: the original rental was at £1,250 but had 50% vacancy for a period of three months. I was reluctant to decrease the price as I wanted to maximise the rent. What a fool I was! This cost me to have voids equating to £1,800 over a three month period. If I reduced the rental to £1,000 I would have only had voids of one month. I collected £1,950 in the three months but if I had dropped the rent to £1,000 per month then I would have collected approximately £2,500. As you can see it was a false economy for me to maximise the rent. The most important factor was to ensure that the property was tenanted.
– If a property is of poor standard there will be two things that may happen 1) void periods increase and 2) like attracts like. If you have property of poor standard then expect a poor standard tenant who will not look after the property and may give you problems in the future. Spending a little money to make the property look clean, tidy and bright can have a significant positive impact on the amount of rent that you can collect and the possibility of getting a good tenant.
– There is little you can do if a property is not in a desirable location. The options left open to you are, to decrease the rent or accept that the property needs to be sold and look for another investment.
– Every property needs to be advertised properly. Irrespective if you are advertising a property yourself or using a letting agent, the property needs to be advertised where lots of tenants can see it. The descriptions need to be accurate and complete. The pictures should be taken on a bright day to make the property look great. Make sure there are details of the local amenities. Be careful of the agents that you are using. Look at the adverts that they have on Rightmove or Zoopla and see if they are effective compared to others. Call the agent (once you have selected two or three agents to work with). Being able to get through and the helpfulness of the staff will tell you if the property will be rented quickly or slowly. Be careful who you work with.
Take action today to minimise the impact of voids on your property portfolio and start to make more money on your investments.
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