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Void Periods


desanj

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Hi all,

 

I am trying to set up a budget for around 3 properties, I wanted to get a consensus from the other investors as to what % do they keep for void periods or how many months rent everyone recommends one should keep for void periods when you have more than 2 properties.

 

I am not sure if I should be holding more cash as I will have more properties and therefore more risk or less as not everything can go wrong at once (I hope).  Please help!

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I factor in one week a year for each of my properties -I rent to LHA tenants and voids tend to be less. I think 2/3 weeks a year is probably sensible. It tends to go you may get none for a year or so then a void. The key is to keep your tenants happy and try to ensure you know their intentions when a tenancy period is coming to an end. In my experience they will tell you if you ask and if you have a heads up you can start marketing the property again before the tenant leaves.

 

A good tenant may also show somebody round and tell a prospective tenant what a great landlord you are or even better recommend you to a friend !

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I factor in one month (which I think is realistic when you factor in cleaning, any necessary repairs as well as advertising and vetting tenants), but I've heard people recommending as high as two months.

I guess some of it comes down to your attitude to risk, as well as how well you know the rental demand in your area, and the likely turnover of tenants.

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  • 4 months later...

I'm the same as lee and factor in about 1 month of void periods. (I say 92% occupancy rate to be exact.)

 

When I first acquired my properties I didn't know what to do and then just monitored this as time went on.  At the end of a 1 year period whether it be from the date of purchase or calendar year etc. I then work out these rates for each year and then average them out per property. My properties tend to vary as I have different levels of desirability and competition in each area so each has a different value but I've settled on this amount as a good average.

 

For me this is a reasonable time to do any review of the property and conduct and maintenance as well as find new tenants.  The process of vetting a new tenant may be quick but you have to coincide their end dates with another tenancy agreement and so it could be a couple of weeks later than you'd like.

Hopefully you can work out what your own portfolio range is as it depends on a lot of factors. Like do you find your own tenants to you ask for a high or average rental for the property etc. etc.)

Kish

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Thank you Kish151.  That does make a lot of sense.  I think after running them for a year I will have some real data which will allow me to analyse and make a judgment call.

92% is an excellent rate! well done.

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