Estimate the vacancy rate before you invest
| There are very few rental properties that will be occupied
100% of the time, but the vacancy rate can vary considerably and
make all the difference between a good investment and a bad one.
So before you buy an investment property, you should look at the factors that could affect the vacancy rate in future, the first being the overall availability of rental property in the area, says Berry Everitt, MD of the Chas Everitt International property group.
Writing in the Property Signposts newsletter, he explains that if there has been overbuilding, the vacancy rate in individual units will rise and it will be difficult for landlords to raise rentals.
But if the local population is expanding faster than the number of units required to provide housing, the vacancy rate per unit will fall and higher rents will become possible.
Secondly, he says, investors should consider the position of the rental property within a particular area. Drive-by traffic generates many rental leads while the hard-to-find property is likely to stay vacant for longer. Potential tenants usually also prefer properties that are close to schools, shopping centres, public transport and arterial roads.
Everitt notes that property condition can also have a significant impact on the vacancy rate. Tenants dont only move because of life changes such as a new job or a new baby. Rental homes need to be well-maintained or any rental increase will swiftly prompt a move to a newer or better-managed property leaving you with a vacant unit that will in all likelihood have to be cleaned, painted and repaired anyway to attract a new tenant.
Article by: www.chaseveritt.com