Its OK to have 5-6 properties with 20% equity in each but what if 3-4 ar vacant at the same time ? Is there any way to get around this ?
I believe there is tenancy insurance for this? I haven’t got it myself at this point but I believe it exists.
Regards Bear
The surest way to get around that problem is to drop your rent!
Cheers
Melmcollins,
I make sure that I can pay the mortgage out of my salary and the rental income goes straight into the mortgage account. As well as paying double off my mortgage, it also means I am not “rent reliant” at all. If I don’t have tenants, frankly it doesn’t bother me. I guess I like to keep my mortgage repayments low enough that my wages can afford it. Otherwise, I feel I am moving into dangerous territory.
Being highly geared can be uncomfortable. It’s probably better to be >70 LVR to save the worry.
kay henry
I have landlords insurance with Terri Scheer and Rent cover but it doesnt cover unrented periods, only loss of rent thru damage, or fire caused by tenants, unrented periods only due to damage etc.
You would have review rents if you had that many properties vacant at the same time. I have experienced one maybe vacant for a short time at the same time, so I would hazard that it is extremely rare to have so many unrented. So I wouldnt let that idea stop me from continueing to invest.[
]Oops. That should have been <70 LVR- hehe.
Oh, and I have Landlord Protection Insurance too- but I only got it *after* I needed it. Now I have good tenants and don’t need it- go figure!
hi mcollins
the name of the game is to have your property rented, 80% of your properties vacant is a huge problem and could send people broke. it is up to you to make sure that your properties are tenanted. i knew a guy years ago who owned 50 properties but he didn’t maintain them, first the rents dropped then he got bad tenants who didn’t pay. he was a very bad operator and went bankrupt. he started buying around the time i did in 1997 i worked out recently that his properties would be worth 2 million more than he paid for them, saddly for him he made $0. so the warning is do whatever you have to to get them rented.
some ideas are 1 weeks free rent, list with other rental managers and one i’ve never done free pay tv.
finally make sure you buy in areas that have a rental demand, ive got 27 properties and only 1 is vacant, this is because it is on the market.
hope this helps a little
westanSorry, a bit off the topic but
“Being highly geared can be uncomfortable. It’s probably better to be <70 LVR to save the worry.”
– Wouldn’t it be better to be more leveraged because then you could use the extra money to buy more properties and reduce your risk that way? You’d also get the benefit of having another appreciating asset
secretgnome
Yes, it might be better for some people to be highly geared- but not for me. I think a lot about “risk” and investment- that’s just me- for others, the risk might be in gettimng more and more properties; for me, it’s about managing my life and not being too stressed by something I like – property is fun for me, and I don’t wanna ruin it by pushing my “affordability index”.
There are some people who get in over their heads with debt. If I owe 70% or less of the value of what I own, then that is what I feel able to risk- for others, their threshhold is higher. But I know of few investors that wish to have a high LVR. I think most people’s aim is to be debt-free at some stage.
kay henry
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