Tenant turnover and tenants affect investment profitability
The profitability of a property investment depends on the ratio between the purchase price and the level of rent. For property owners, every month in which they do not receive payment from tenants is a significant problem, particularly if they are repaying a mortgage themselves. Investing in a flat only becomes worthwhile when the property is let long-term to creditworthy tenants with a good payment record. How can you achieve this?
The key to successful investment
If you are planning to invest in property, two fundamental things will be crucial:
- how to buy a flat at a good price,
- how to let it successfully afterwards.
Finding a reliable and respectable prospective tenant is essential to minimising the problems associated with property investment. At a time when the number of habitual non-payers and debtors continues to rise, this is no easy task. And even if you eventually succeed, you have not won yet. Late or unpaid payments are common even when dealing with respectable people and represent one of the drawbacks of property investment, especially if you financed the purchase of an investment flat with a mortgage loan.
What affects investment profitability
When calculating potential annual returns, a number of variables play a key role, not just the purchase price and level of rent. The costs of renovating the property, property management and the share of borrowed funds, such as a mortgage loan, are also important. Mortgage repayments are a regular monthly commitment, which most owners expect to be covered by the rent collected. However, payments from tenants may be uncertain due to circumstances beyond the owner’s control. Late payments or long gaps between tenancies can therefore significantly affect the owner’s ability to meet their financial obligations.
In situations where there are gaps between tenants and the property is temporarily vacant, or where the current tenant owes one or more rent payments, the owner can easily become insolvent.
How to let without worries
For those who do not want any worries associated with letting their property, the Guaranteed Rent service is available. This service is ideal for owners who purchased their property with a mortgage and do not want to face difficulties if the property is vacant or the tenant fails to meet their financial obligations. Through this service, we lease the property from the owner, find a reliable tenant and check that they have no outstanding debts. We then enter into a lease agreement with them and pay the owner the agreed rent regularly, even if the property is vacant or issues arise with non-paying tenants. In this way, we take care of all matters connected with the tenancy and the property on the owner’s behalf. At the end of the tenancy, we guarantee that the property will be returned in perfect condition.