Real Estate Investor Magazine South Africa July 2015 | Page 32

STRATEGIES

Vacancy Risk
Risk management in buy-to-let
BY KOOS DU TOIT

A

vacancy is a substantial risk for a buy-to-let
property investor. Without a tenant paying
rental, the buy-to-let investor is not receiving
an income from the property, and must - in addition fund the expenses associated with the property out of
their own pocket. This can have a significant impact
on the investor’s cash flow and the viability of the
investment.
However, pure common sense dictates that even the
best property in the best area will not be tenanted every
day of every year for the next 10 or 20 years. For this
reason, it is crucial to understand the risk thoroughly
and address it before purchasing an investment
property.
Understanding the risk
A vacancy can be the result of a number of issues, and
there may be a number of contributing risk factors, each
of which needs to be