21:02 PM, 13th August 2012, About 11 years ago 10
As we all know, the landlord’s most dreaded expense is void periods and I am always looking at innovative ways of trying to achieve the “holy grail” – 100% tenant occupancy – 100% of the time.
Renting to DSS tenants (as discussed in DSS tenants – another issue) can drastically reduce our voids but, as your many comments highlighted, DSS tenants do not come without their own unique set of tenancy issues – which are not palatable to large swathes of fellow landlords!
So – how can we reduce our void periods without turning to the DSS?
Large businesses spend a lot of money on customer service to try and retain their existing customers because they have realised that it is more costly to attract new customers than it is to try and please / retain the existing ones. Could this work for landlords? After all – landlords are in the business of providing services (ie: homes) for their tenants aren’t they?
If we provided excellent customer service and focused on tenant retention – could we reduce our void periods? If we could then we would also reduce our marketing costs (and setup charges if we used a letting agent) and, as a result, we would create more profit – wouldn’t we?
Over the past few years I have been trying to focus on the customer service aspects of my buy-to-let business and have come up with the following strategies which have seen my void periods almost totally eradicated.
Maybe they want a more efficient shower fitted in the bathroom. Some landlords would complain about the cost – but a new shower is a lot cheaper than a new tenant and it improves the overall capital value of the property and it is probably tax deductible!
Perhaps the tenant wants a pet. As long as the tenant signs a pets clause making them liable for any damage and pay a slightly higher Security Deposit then I usually say YES (unless they want to keep a Rottweiler in which case I always say NO).
Some tenants would like a TV aerial or a Satellite dish. I always agree to the TV aerial (and pay for it to be fitted) and give permission for the Satellite dish as long a the tenant pays a local TV company to supply and fit it.
My aim, as a landlord, is to retain all of my tenants in all of my properties for life!
I know this is an impossible objective but if I could achieve it then my voids periods would be radically reduced.
So, a tenant rents a 1 bedroom flat (after they left university) and they then meet their girlfriend and get engaged. They want to move into a 2 bedroom property to settle down for the future.
The couple get married (or maybe not these days) and start a family. They now want a three bedroom house and, as their family grows, they might even need a four bedroom house in the future.
The point is that, due to my focus on customer service and retention, they approach me asking for a larger house rather than taking the risk of renting from someone else!
At some time – one of your tenants is going to ask you for a property type that you either don’t have available or you don’t currently own and this is where a Buy to Order strategy can work well.
I let my tenant identify the kind of property and location where they would like to live and I then buy them a property to order! I talk to estate agents, view properties, negotiate a deal and – once my offer to purchase has been accepted by the vendor – I arrange for my tenant to visit their new home.
The advantage of “buy to order” is that you have already found a good quality tenant and all I need is a new investment that they would be happy to rent. Once the purchase is done – the tenant moves into their new home on completion day thereby avoiding any void periods!
Over the last seven years I have purchased five properties “to order” and all of these “lucky tenants” are still renting from me today!
The only time when I wouldn’t consider “buying to order” is when the tenant was looking to move away from my local area (as I like to own investment properties close to me) or if the yield was under 6%. I am always prepared to sacrifice some of the yield in exchange for a long term tenant that creates zero voids.
I would be really interested to hear what strategies other landlords adopt to try and reduce their void periods?
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Mark Alexander - Founder of Property118
21:13 PM, 13th August 2012, About 11 years ago
Brilliant article Mark - I too have purchased to order when it's made sense to do so and you are right, it's worked very well for me. What's with the downer on Rottwieler's though? I have a friend who has a 9 year old Rottie, a brut of a dog but gentle as a kiddie's teddy bear and nobody but nobody is ever going to break into her house! She's a good tenant too which is a good job I suppose as I doubt many people would want to be the bailiff trying to turf her out LOL. Seriously though, I don't think you can judge a dogs reputation by breed, more often than not their personality is a reflection of the owners.
16:49 PM, 14th August 2012, About 11 years ago
Have you considered the strategy of renting by the room. If you have a 3 bed property and a family leaves, all your income vanishes for the whole period. If you're renting by the room, and one tenant leaves, you're getting more income for the house overall, you've still got 2 lots of rent coming in while you replace the third tenant.
16:54 PM, 14th August 2012, About 11 years ago
Totally agree with you on that one MA. I too have purchased to order when logical to do so and do not regret it. I also allow pets but dont distinguish with breed - and as you say the house with the Rotty will be far safer than the house with the goldfish so less likely to get turned over. Regarding the article I too have found that a variety of size from 1 bed to 3 bed has helped retain tenant base
17:06 PM, 14th August 2012, About 11 years ago
Interesting strategy. I assume in relation to points:-
1. You do not own any flats as otherwise you cannot give consent to an individual satellite dish
without freeholder consent.
2. If you kep all your tenants in all your properties for life Mark you wouldn't just radically reduce
voids - you'd eliminate them completely!!
3. Why would the tenant only visit after you had made an offer and had it accepted? What
happens if they don't like the property you have just committed to buy?
16:58 PM, 14th August 2012, About 11 years ago
sometimes its good to have a change of tenant. we find it very hard to yearly increase rent fully in line with inflation and i hear of many landlords who never attempt to put up rents mid term. IMO very bad business. when a tenant leaves for whatever reason and usually no reflection on us or the accommodation, we invariably achieve a large rent increase and short void...so apart from the hassle well worth it. with the amount of churn in london very unlikely buy to order would be worthwhile.
19:48 PM, 14th August 2012, About 11 years ago
I have virtually no voids in any of my rooms. I rent rooms individually, I put ads on Spareroom.com the moment I am told someone is leaving., this costs me less than £100 a year for 2 ads which I can keep changing and keep them on my "file" on Spareroom with photos etc, I just have to click on them and they are re-instated when the room becomes vacant again. The notice period they are supposed to give me is one month, the deposit I take is £100.
I don't take references. I talk to the person for a fair bit and if I feel OK about them they are generally fine, with one or two alcohol-related memorable exceptions. The rent is payable one month in advance. Very occasionally I lose a bit of money if hardly any notice is given to me when they leave, but I can generally let a room within a week or two, due to the standard of accommodation being high and the deposit being only £100, and the rents reasonable. The area is in demand for rooms as there are a lot of places of work around here., so the £100 deposit usually covers a short void period beyond the short notice period they may have occasionally given me.
I did let one lady have a cat, as we have cats, but it has caused a lot of problems including a tom cat coming in and spraying and the place stinking of cat wee and complaints about hygiene from the other tenants. Also the destruction of the carpet where the cat has tried to get out of the living room when the door has been shut to the rest of the house as another tenant didn't want it going upstairs.
But really, he knew there was a cat there when he moved in so he should not be shutting doors on it or moaning about it. But neither should she be feeding her cat on the work surface and encouraging it to drink from the kitchen tap! All fun and games. They are both still living there though in a constant state of warfare! Meanwhile people in the other two rooms come and go and they wonder why.
22:29 PM, 14th August 2012, About 11 years ago
On point 3, I guess the offer could be made subject to tenant's approval. As long as they express whatever objections they may have at the beginning of the buying process, you can still pull out without any real damage being done. But if they've already told the landlord what they'd like and this ticks the boxes then they shouldn't have any objections - and remember, this is a landlord that they want to stay with!
On point 2, you'd still have voids in the smaller properties when the tenants traded up (unless you happened to have someone else trading down at the same time and could do a straight swap!).
8:54 AM, 15th August 2012, About 11 years ago
My strategie is to purchase one bedroom flats in difrent cities and countries when there is blood on the streets, BMV flats for cash and refinance them when the market is up to use it for invest in the next location.On this strategie you have more costs of the latting agents but you have mor capital gains because you dont have to whit 15 to 20 years to dubel the properties pricies it could be hapen evry 7 to 10
years also you diversify your properties locations and currencies from rent.
11:47 AM, 15th August 2012, About 11 years ago
Same as u above, couldn't have said it better, I've had some tenants been with me 15 years. And I've bought houses for tenants, although they do ruddy move into another one of mine a year or 2 later, so the house purchase has to be cheap enough to start with. AND they have also saved me a job of THEM FINDING the house for me that I would have bought anyway if I had the time to look. So they've earn't me a lot of locked in equity to start with.
And as much as it's a pain them swapping houses every year because they want another one of mine, it still keeps me a good tenant, when I could end up having 2 bad ones if they leave & I don't give them the one that is coming up.
I don't do 'em too much to start with, but once a year has passed, I bend over backwards to help them.
23:34 PM, 18th September 2012, About 11 years ago
there is now a new kid on the block. it's called letrent.co.uk.
you load your advert, which lasts a whole year, but you can switch it on or off as many times as you need to, change the narrative, the pictures, in fact almost anything except the type and location of the property. costs just £15 per year per property or room or shed or house or flat.
and tenants can rent either on a day by day, week by week or long term. it's your choice how you let it out.