Vacancy risk
Previously I discussed the defect risks when you acquire the property.
Today I will discuss the risks while you are owning the property.
In fact, there are several challenges while you own and manage the property.
Vacancy is one of them.
Vacant rooms obviously do not generate any income so it is very important
to fill your property (whether it is a rental house or a small multiunit rental property) with good, rent-paying tenants.
However in practice, you will see vacant rooms for certain time period over the years and there are tenants who don’t honor the leasing contract.
Let’s look at the ‘vacancy risk’ and how to mitigate such risk.
The beauty of real estate investment in Japan is that your can expect very
stable income every month. Rents are usually paid monthly.
Therefore finding stable trustworthy tenants is a key for success.
However, due to certain reasons such as inconvenient location of the property,
Investors may face the situation where the property being vacant.
If your occupancy rate is very poor, you may have the problems to pay back
the loan. That is the ‘vacancy risk’.
