Risk 3 – Rental Vacancy
I am going to jump straight into Risk 3 – Rental Vacancy as this one can be very challenging!
What is a rental vacancy? Quite simply, your investment property doesn’t have a tenant and you have to foot the bill for the mortgage. There are three ways to avoid rental vacancy:
1. Buy a property that is in demand in a market with a very small vacancy rate. This ensures that your property will always be popular and you’re guaranteed to easily find tenants.
2. Set your rent to $10-$20 cheaper than the market rate. It may sound like you’re throwing money away, but you’re not! When you add it up, $10 per week is equal to $520 per year. If your rent is set at $500 per week, you’re basically only losing one week’s worth of rent.
When you compare that to a vacancy that can last upwards of two weeks, it makes sense to price your rent slightly lower to ensure you always have a demand.
3. Get a reputable property/rental manager and make sure that they LOVE YOU🥰
Send them flowers, heap praise on them, and make sure that they think you are the best thing since sliced bread. Why?
Whenever they have four properties that are vacant and only one tenant is looking for somewhere to rent, if your rental manager loves you, they’re going to give that tenant to
you. If you get cranky with your rental manager, giving them a hard time they are going to put your property as the lowest priority and that is going to cost you.
Is this making sense?
Next, I will break down the 4th risk – Interest Rate Rises.
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