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  • Profile photo of ausclaudausclaud
    Participant
    @ausclaud
    Join Date: 2003
    Post Count: 3

    just wondering !! when starting out and you do buy your first place what can be done if rental is ok but suddenly your looking for another tennant!!! this could slow your next purchase down as the income is usually required by finance companies to loan you more, what happens here??? what guarantees are ther for you to always have a tennant, i understand it would be ok after you have a few properties as they would be covered for short periods by the income generated by tennanted homes, however theres still the question of what can you do at the beginning, it can be a big 1st risk!

    Profile photo of BDMBDM
    Participant
    @bdm
    Join Date: 2002
    Post Count: 93

    G’day Ausclaud,

    And therein lies the wisdom of “due dilligence”…. making sure that as much as possible is saying to go ahead or not with any individual purchase.

    The only guarantee that you will always have a tennant is to lower the rent. As long as the property in question is suitable for human habitation, the simple act of lowering the rent will fill an otherwise empty property.

    So – do some serious number crunching and factor in as many “worst case scenarios” as you can think of. Then assess the risk. If the numbers are acceptable to you, then go for it.

    All investing carries some risk. The key is to work out how to minimise this risk. This may mean simple number crunching, or renovating in order to increase the potential rent or potential tennant interest. Or get your tennants to sign 12 month leases rather than 6 month leases, or only buy cash flow positive properties, etc, ….

    There are a million things you can do to minimise the risk you mention, but you will never remove it completely.

    Have a good one,

    BDM

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