vacancy and rental income from rental property

For the landlord, the rental price and the resulting monthly income are one of the most important aspects their rental business. The desired rental price is often used as a basis for selecting a tenant and making future investments. However, the cost of an empty apartment is often not taken into account. 

To explain this situation, we have put together a simple price matrix. In this matrix, we use an example to show that a rental property that has been vacant for a month will generate the same “loss” as it would be if the landlord will reduce the rental price by 7-8%.

vacancy and rental income Photo: Bidrento

Then, what is the most useful decision landlord should make? Is it to stay looking for a tenant who is willing to pay a desired rental price, but who may take several months to find, or lower the price by 5% and find a suitable tenant immediately?

Based on the matrix, it becomes clear that it would be most beneficial for the landlord to agree to lower a rental price by 5% and rent out property immediately. In addition to the loss of rental income, the vacant apartment also generates other maintenance costs – like utility bills and etc – that the landlord has to pay from his or her pocket. Before you say no to a lower rental offer, you should therefore consider and consider whether a 5% discount might be an option after all.

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