…learn our system to banish voids
We all get into property for one reason: to build a better life for ourselves and our families. If you constantly struggle with voids, you will probably never be able to achieve those dreams of financial freedom, the Ferrari’s, the fandango’s or that flap-jack factory you dream about building (we’re all different!).
Some of us are great at raising finance, others terrific at finding cracking deals, some of us are as cool as a cucumber when it comes to negotiation, then there are those who excel at getting refurbishments done on time and on budget. We are all unique with unique skill sets, and if you are struggling in any one area it’s a little crazy to bumble on year after year, getting mediocre results and lashings of free stress as an added bonus – and let’s be honest, showing rooms is never at the top of anyone’s wish list!
When Emily and I started our Rent-2-Rent (R2R) business in Bristol four years ago, no matter what we tried we could never seem to achieve a consistent 100% occupancy. In hindsight we can see it was because tenants and tenant-finding was not where our strengths lay; we were more focused on building the actual business and our R2R training events.
£240,000 of voids!!
So three years ago we were very ‘busy’ (un-systemised) and running at 8% voids (a horrible word!). We did a rough calculation to work out how much money we were actually losing. At that time we had 25 multi-lets with an average of five rooms per property that we either owned, were R2R’ing, or that we were managing for someone else, with an average of five rooms per property. We aim to make £100+ profit per month per room; at 8% voids that loss was running at around £1,000 pm. Multiplied by twelve months, that is £12,000; multiply that by say twenty years, and we would be losing a whopping great £240,000!
If you already work in property and are experiencing voids, just pause a second and consider what this will cost you over your glittering career and what you would rather spend that money on.
Our figure was not taking into account any expansion of the business or rising rents (with R2R this could be off-set by our rents to the landlords also rising).
We were shocked and decided to do something about it
The worst thing about having voids isn’t even all the money you are losing month after month, it’s all the headspace they take up. Even when you try not to think about them and push them to the back of your mind, they just keep bobbing back up there on a regular basis. This then transforms into stress bubbles that, if not dealt with once and for all, could have a long term detrimental effect on your health.
After the initial shock of all that lost money had subsided, we resolved to do something about it and made a bold decision to completely eradicate voids from our portfolio … f-o-r-e-v-e-r! We analysed every moving part of our business, putting even the tiniest component under the microscope. We also researched other landlords who claimed to never have voids … and often found that they were being a little ‘imaginative’ with their figures!
Our first decision was to directly employ a really good property manager, as we knew we would never really master this role. We had been reading The E-myth by Michael Gerber and decided not to make the common mistake of finding someone who was ‘OK’ at the job, no, we would find someone passionate, self-motivated and totally driven.
French Dancer to help fill rooms?
Next we needed to find many other ways to keep our rooms full, rather than just chucking an advert on Spareroom and hoping for the best – to date we have identified seventeen different strategies. One thing is for sure: sometimes you have to think outside the box to make things happen. We tried and tested everything we had ever done ourselves or ever heard of; even the totally wacky but hugely successful ‘French Dancers and Trainee Firemen’ strategy! We kid you not!
Within four months we had systems in our business that meant we would never have another void. From that day to this, we have consistently had 100% occupancy. When we say 100% we mean 100% – any re-painting of rooms or other maintenance is organised for tenant changeover days so we don’t even lose an hour’s rent. We always know well in advance if a tenant is thinking of moving on, so are one step ahead in finding the new tenant.
In fact we incentivise the departing tenant and their housemates to find us a new customer.
Over the following months we were bombarded with questions about how we achieved this (even from landlords with 100% occupancy!). Rather than repeat the same thing over and over again, along with our property manager Will, we produced the mini-manual Endless Tenants.
Where to start
Start creating a database with the names and mobile numbers of anyone who has EVER shown an interest in your rooms. A good way to bump-start your list is to run a few ads with your best ever rooms at a silly low price. When people call, say ‘I’m sorry that room’s now gone but I’ll save your details for next time’. We also got the numbers of people working in trendy café’s and gyms, and other places your tenants may frequent. The reason for this is that you can offer £25 (or £50) if anyone finds you a tenant you accept. When you visit the café’s and gyms, ask if you can leave some business-sized cards that say ‘Rooms’ on the front in big print and ‘for Professionals’ smaller underneath. On the other side put your contact details and the £25 offer.
If you have foreign nationals or potential tenants on the other side of the country, try Skype viewings. Oh my giddy aunt! We did twenty-five Skype viewings and got twenty-five new tenants as a result. Customers are getting more savvy, and where in the past they would believe what they read on Spareroom and what they saw on a pre-recorded ‘walk-through’ video, these days they want rock solid evidence that the property is up to their exacting standards. A live video call where they can ask questions, and even get to meet your ‘less facially challenged’ tenants, is absolute dynamite at sealing the deal.
Preparing for a viewing
We are all busy and getting busier (although ‘busy’ doesn’t always mean productive); maybe, like we used to, you cut your viewing right down to the bone to squeeze as much into the day as humanly possible. We would often arrive at the viewing to the second, to find the potential tenant already waiting for us. Not waiting around saved us precious time, but it also meant we didn’t have a chance to dress the room and prepare the property for the viewing, doing things such as: checking kerb appeal, bins, alien smells, the general condition of the house and reminding yourself who else lives at the property. You are now in sales mode and need to ‘sell’ the room, so knowing the names and jobs of the other housemates is essential. Allow at least ten minutes for this. You also need to know the local area, where the shops are and frequency of buses, especially the night bus!
Asking the right questions
Now that you have some great tenants, how do you keep them? We have fifteen killer questions we always ask, in a conversational manner, to ensure we get great tenants from day one. One question is, “Can we see three months’ bank statements?” You may think this intrusive but we have only ever been turned down once. This will tell you 1) that they have a job, 2) who their employer is, 3) they are in control of their finances, 4) they can afford the room, and 5) they paid the last three months’ rent to their current landlord. If any tenant is going to withhold rent it will be at the end of the tenancy. We also say, “this is a quiet house with smart working professionals who keep the place clean and tidy”, and ask how they will fit in and why we should accept them. Then we stop talking and allow THEM to talk themselves into taking the room. Before they know what hits them they have transferred a £100 holding deposit to your account and set a moving-in date.
We live by Endless Tenant rules and don’t ever worry about having empty rooms. It spells out every tactic, strategy and trick we use to ensure that we are FOREVER at 100% capacity. Not only has this has boosted our cash flow, but it has also freed up a lot of our time. How so? Sure, operating at 100% means less viewings and less time wasted, but we also have better quality tenants who tend to stay longer. With the extra spare time we create better systems which frees up even more time. It’s a virtuous circle of abundance!
…is a fool-proof blueprint of simple, pragmatic ideas for ensuring a constant supply of pre-qualified, quality tenants, guaranteed to keep your rooms full, maximise your rental income and help you sleep at night.
You can find this manual at www.multiletcashflowsystem.com and click on the ‘Store’ tab.
At this price if it helps you fill just one averaged price room for three days it will have paid you back.
To access your copy of Endless Tenants just click here