Having 6 out of 16 properties vacant!

S

sash

Well I thought I would share my experience over the last 2 months.

Over this period I have had up to 7 out of 16 properties vacant....this could have left me with a hole of up to 7k per months in negative cash-flow. At anyone time I had up to 6 vacant.

Some of these involved (2 in fact) where the tenants absconded. It seems that the cost of living pressures are definitely hurting people.

In anycase....over the last months I have managed to get the number of vacant properties down to 3......1 has a tenant moving out on Thursday, 1 has just been filled, and 1 is in the process of being renovated ( just bought this one).

So the moral of the story in my experience is:

1. When faced with this situation drop the rents quickly if it is poor market to get a tenant in. One property had 3 months vacancy because of lazy agent...I got rid of them and it is now about to be filled. If they are bad fire them quick!!...unfortunately I should have done this earlier.

2. Keep 6 month of rental income as a buffer.

3. Keep records and follow-up agents diligently.

4. Above all CF+ is king...I was fortunate due to large CF surplus...my out of pockets have been $1k or less per month. I cycled the properties into the rental market. I am seeing landlords who are not doing this...and they are about to tip over the edge!

I think in some areas - i.e. Melbourne and Brisbane the rental market is poor. NSW has kept me going!!!.....go Le Bleu!;)

Would love to hear other people's experiences.
 
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If you call Melbourne, Brisbane, and Adelaide woop woop! The one in Hoppers Crossing has to have the rent reduced from $280 to $250k....but due incompetent agents who I should have sacked earlier this one hung around. The nice thing is the CG on this has been 160k on a 170k purchase in less than 5 years.

Apart from one I have in Albury....all the other ones in NSW rent within 1-2 weeks!

Also, I tend to get top rent....i.e. $350pw on a purchase of 232k.

All good now.....

BV said:
Vacancies?
What vacancies? :confused:
Stop buying in Woop Woop mate
Click to expand...
 
sash said:
1. When faced with this situation drop the rents quickly if it is poor market to get a tenant in. One property had 3 months vacancy because of lazy agent...I got rid of them and it is now about to be filled. If they are bad fire them quick!!...unfortunately I should have done this earlier.

I think in some areas - i.e. Melbourne and Brisbane the rental market is poor. NSW has kept me going!!!.....go Le Bleu!;).
Click to expand...

Surely not. The Somersofters keep saying vacancies are at record lows, and rents will rise and rise:rolleyes:

You are correct sash. I think increasing cost of living pressures will reflect in stagnant rental markets.
 
For the moment....but thanks to JOOOLIAAA.....the price of building will increase. Already building is slowing....and I suspect the balance will shift to put pressure on the rental market. Even in Qld...this is happening....but it will take about a year for some areas to work through the oversupply.

bluestorm said:
Surely not. The Somersofters keep saying vacancies are at record lows, and rents will rise and rise:rolleyes:

You are correct sash. I think increasing cost of living pressures will reflect in stagnant rental markets.
Click to expand...
 
i have found rents strong in every market, I don't have a vacancy in any property, although i do have a couple of tenants in arrears.
 
Yes....that is correct.

It allows me to renovate or fix properties which mayhbe damaged by tenants. Insurance companies are notoriously slow in paying.

The vacancies are happening...but also I have pushed the managers to fill the properities with decent tenants. If they can't I get rid of the agent.

I think rents will go up considerably once building start drops soak up the current capacity.

I am currently at about 230-240k in rents for the year.....hope to push this figure up to 250-260k (assuming no further purchases).

With that I should have a CF+ of about 60-70k assuming rates stay the same.

I also should have about 40-50k in depreciation deductions. So I would only pay tax on about 20-30k income. I should be able to pocket most of it. And that does not include other deductions.

However, I do pay most the tax on my personal income....which is easily equivalent to the CF+ income.

devank said:
6 months buffer for all 16 properties??
Click to expand...
 
bluestorm said:
So soon you'll have some vacancy:p when you need to evict the tenants for being behind in rent.
Click to expand...

normally i just let them stay, happy to help out the battlers for as long as need be, record is 18 months someone stayed without paying, as long as they have a good sob story its all good with me
 
sash said:
Well I thought I would share my experience over the last 2 months.

Over this period I have had up to 7 out of 16 properties vacant....this could have left me with a hole of up to 7k per months in negative cash-flow. At anyone time I had up to 6 vacant.

Some of these involved (2 in fact) where the tenants absconded. It seems that the cost of living pressures are definitely hurting people.

In anycase....over the last months I have managed to get the number of vacant properties down to 3......1 has a tenant moving out on Thursday, 1 has just been filled, and 1 is in the process of being renovated ( just bought this one).
Click to expand...

Thanks for sharing, Sash. Shows it isn't all beer and skittles. All my properties are in Melbourne. The rental market is certainly slow. The agents managing my IP's tell me that properties are sitting empty for ages, and some land lords are reacting slowly (ie refusing to drop their rent).

Point Cook is over supplied with rentals and according to one of my pm's it can take 2-3 mths to rent a property there at the moment.

sash said:
So the moral of the story in my experience is:

1. When faced with this situation drop the rents quickly if it is poor market to get a tenant in. One property had 3 months vacancy because of lazy agent...I got rid of them and it is now about to be filled. If they are bad fire them quick!!...unfortunately I should have done this earlier.
Click to expand...

Yep, I'd agree with this. Although I had one vacant for 3 mths in a middle suburb in melb last year. It became vacant in September -which is a bad time to find tenants anyway. We took the opportunity to refurbish the property.

sash said:
2. Keep 6 month of rental income as a buffer.
Click to expand...

Yes, at least. At the moment my buffer would last for 7 yrs on each of my properties.

sash said:
3. Keep records and follow-up agents diligently.
Click to expand...
I think this also demonstrates to the agent that you have a fair idea of what is going on with your properties.

sash said:
4. Above all CF+ is king...I was fortunate due to large CF surplus...my out of pockets have been $1k or less per month. I cycled the properties into the rental market. I am seeing landlords who are not doing this...and they are about to tip over the edge!
Click to expand...

Yes, or at least having significant buffers to tide you through difficult rental markets.

sash said:
I think in some areas - i.e. Melbourne and Brisbane the rental market is poor. NSW has kept me going!!!.....go Le Bleu!;)

Would love to hear other people's experiences.
Click to expand...

I think that inner Melb has been hit by the effects of the high AUD which is having a negative impact on the international student market. Not to mention KRudd's decision to make international students return home immediately after their course.

We are certainly in interesting times. Finding excellent property managers is certainly extremely important. Be nice to your pm - cause they will be nice to you if you look after them!

Regards Jason.
 
Bigtone said:
normally i just let them stay, happy to help out the battlers for as long as need be, record is 18 months someone stayed without paying, as long as they have a good sob story its all good with me
Click to expand...

18mths:eek: Your running a charity, not an investment portfolio. I work hard for my retirement, not the tenants freeloading.
So you saying that you have no vacancy is "accurate". You just happy to keep non-paying tenants.
 
bluestorm said:
18mths:eek: Your running a charity, not an investment portfolio. I work hard for my retirement, not the tenants freeloading.
So you saying that you have no vacancy is "accurate". You just happy to keep non-paying tenants.
Click to expand...

Bigtone, I think you lost bluestorm on this one...


bluestorm - *cough*sarcasm*cough*


Boods
 
Wow the western suburbs are getting hit pretty badly....I'm not surprised but I thought there would be more media coverage of this
 
InnerWestie said:
Thank God for NSW!
Click to expand...

A few years back we had a similar situation in NSW.
Many of our tenants had decided to buy their own property so there was a high number of vacancies.

I didn't have a problem but I know some landlords had to give 1 and 2 weeks free rent and to even lower their rent to get their property tenanted.

Looking at the high cost of construction these days and the low number of building approvals, it doesn't look like we'll have this situation again in NSW.
 
BV said:
A few years back we had a similar situation in NSW.
Many of our tenants had decided to buy their own property so there was a high number of vacancies.

I didn't have a problem but I know some landlords had to give 1 and 2 weeks free rent and to even lower their rent to get their property tenanted.

Looking at the high cost of construction these days and the low number of building approvals, it doesn't look like we'll have this situation again in NSW.
Click to expand...

I posted something similar back in 2004. Had 3 vacant properties for a long while in Sydney. Since then, my rents in Clovelly and Randwick have been on the up and up, and I reckon they have a long way to go :)
 
Sash, i think the fact that your properties are CF+ has added to your problems (or caused them).

You like to buy in marginal, low income dodgy areas where you can get CF+. Its these areas that suffer when things get tough.

Your huge vacancy rates are a direct result of the areas you buy in.
 
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