Void Periods: What does that mean for you?
If you purchase a property for £300,000 and its received a monthly rent of £3000 you are yielding 12% and this would take approximately 8.3 years to recoup the purchase price. With the same purchase price, the same rent but a month void period between tenancies once a year this starts to look different. Your yield would fall down to 11% per year meaning the time is takes to pay off the same £300,000 purchase price jumps to approximately 9.1 years. These calculations do not take into consideration the purchase option, so these figures may increase, as many landlords will use a mortgage to leverage their money and create higher yields and not “put all their eggs in one basket”.
Many things can be the cause of void periods such as décor, location, current cleanliness and the asking rent and I believe it is your agents roll, if you use one, to clarify the issues well in advance of the tenants vacating the property to give you the best chance of a successful let. You may well want to visit the tenants as they may inform you of outstanding issues that may be off-putting to prospective tenants and you may find they are boxed up and walking around the home could be difficult for viewers.
So my question to you would be; If you have experienced a void period, what can you do to stop this happening again? Did you have constructive feedback giving you an indication of why your property was left empty?