hotels articles

At some point, every buy-to-let investor will face the spectre of rental voids but it’s what you do about them that makes you either a victim of circumstance of a savvy investor. The smart investor takes action to minimize such down periods and here are a few tips I’ve found helpful in doing so:

Seasonality: There are certain times of the year when people stay put because they’re focused on other things. Summer holidays and Christmas are just a couple of those “things” that affect large numbers of people at the same time. After summer, you’ll find that September should see more activity (and you can probably write off most of January, too). The summer dip is particularly relevant in areas of high student density, e.g. university towns, especially if your property might normally be let to these types of people or people related to this business. Wherever possible, then, ensure that your existing tenancy doesn’t end around these times.

Apathetic Letting Agents: Try and gee them up by telling them that you’re placing your own ad and if you introduce the tenant you want a reduction in their fee. You could also make your property available to more than one agent and promise that the first one to fill the vacancy gets the management for the next year. If an agent thinks they’re the only one, they won’t be inclined to try so hard.

Be Proactive: Don’t just sit back and wait for others to do the work. Remember, it’s your money that’s dripping (or gushing) away all the time the property is empty. Here are some ideas of actions you might take:

• place your own ad
• directly contact large employers and accommodation officers in local hospitals and universities
• offer an incentive (free TV/DVD player/holiday/champagne, etc)
• drop the rent to just below market for the area (a reduction of £5 a week for the year = £260, compare this with how much you’re losing each month the property is empty and you have to continue paying the mortgage)
• find out what people are looking for that would make your property more attractive than others that are currently vacant

To Furnish or Not? Only consider furnishing the property if you’re getting people asking for it to be furnished. If you just do this on the off chance, you could end up with a bunch of furniture to get rid of if they then want it unfurnished. You might list as “will furnish if required”. Quite frankly, the achievable rental will be barely affected, if at all, and you’ll then be liable to replace things as they wear out (although you will be able to depreciate the costs of furnishings by about 10% per annum off your tax bill – see my article on “Reducing Property Income Tax”).

If you do go the route of furnishing, get new (IKEA, perhaps) rather than second hand. Although the 1950s furniture will be around forever, people prefer new and modern rather than old and sturdy. In addition, if you do buy from IKEA, the products are cheap and stylish and it’s probably the only store that will be able to fill your order quickly (even though you have to do the legwork yourself). Here’s a tip you’ll appreciate if you’ve ever gone the flatpack route… get a professional to do the assembly for you, it’ll be done quicker, to a better standard and they’ll probably have spares if any of the fittings are missing. And a tip within the tip is, if you’re buying at IKEA, ask around among the loading staff in the aisles whether they know anyone who does such assembly, some IKEA staff have side businesses doing just this.

This entry was posted on Wednesday, December 6th, 2006 at 1:34 pm and is filed under Building a Home. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.