When it comes to property investing, most people run their numbers with laser focus on the purchase price, mortgage rates, and projected rent.
But there’s one expense that can quietly drain your profits if you’re not ready for it: void periods.
Why Void Periods Are a Hidden Accounting Challenge
When landlords and property investors sit down to run their numbers, they usually focus on purchase price, mortgage payments, and expected rent. However, one expense is often overlooked: void periods.
Void periods occur when your property remains unoccupied between tenants. Even the most in-demand properties can have them, whether it’s a few weeks between tenancies, time for renovations, or a slow market period.
The Financial Impact of Vacancies
From an accounting perspective, void periods can quietly disrupt your cash flow. Your mortgage, insurance, utilities, and other fixed costs still need to be paid, but there’s no rent coming in to cover them. For some landlords, one long void can wipe out months of profit.
How to Build Void Periods Into Your Numbers
– Set aside a portion of your monthly rental income into a dedicated “void reserve” account.
– Budget for at least one month’s lost rent every year, two if you’re in a high-turnover market.
– Track and review your vacancy trends over time to improve forecasting accuracy.
Conclusion
Void periods are a fact of life in property investing. The difference between a stressed landlord and a confident one is whether they’ve budgeted for them.
At Klarity Accounting, we help you see beyond the optimistic figures to plan for the absolute numbers, ensuring your cash flow remains stable, no matter what.
