Wednesday, August 24, 2011

A very short vacancy

The tenant in my highest renting property gave notice to quit last Friday. If the property remained vacant, I would have negative cash flow on the rental portfolio as a whole (although principal payments are the biggest component of the cash outflows, so I would still be making a profit).

However, a new tenant has been signed up already and I will be banking the cheque at lunchtime.

While the new rent is 11.4% higher than the previous rent, I am not actually any better off unless the new tenant stays there for more than year because the negative effect of (i) agent's commission (ii) tidy up and cleaning costs and (iii) a two week vacancy between tenancies is equal to just under 12 months worth of the rental difference.

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