This week on Ask Rob & Rob, Richard from Edinburgh asked:
What’s a safe amount to put aside for rental void periods?
Ultimately there’s no hard and fast answer, but your own personal comfort levels will be a good guide. While it’s possible you could be without rent for 9 months and still have to pay to replace the boiler, in all likelihood this isn’t going to happen. But if you’ve got a difficult tenant and your boiler is 9 years old, you should plan accordingly.
If you’ve got multiple properties, instead of increasing your risk, it actually reduces it, as you don’t have all your eggs in one basket. The chances of all your properties being empty at the same time is very low, meaning the properties that are making money can subsidise any that are losing out due to voids.
You might want to consider rent guarantee insurance to further reduce your risk. This episode of Ask Rob & Rob covers that very topic.
One paragraph here about the answer, with R&R in the 3rd person (so not “we”). e.g. “Never an easy decision! The answer touched on weighing up yield and capital growth, as well as the impact of tax on your final financial position.”
Links mentioned in this episode
- The Property Geek: How much cash should a property investor hold?
- Ask Rob & Rob: Should I pay for a rental guarantee?
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