3 Approaches to Finding an Area’s Average Vacancy Rate

3 Approaches to Finding an Area’s Average Vacancy Rate

3 min read
Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and podcaster. He is a nationally recognized leader in the real estate education space and has taught millions of people how to find, finance, and manage real estate investments.

Experience
Brandon began buying rental properties and flipping houses at the age of 21. He started with a single family home, where he rented out the bedrooms, but quickly moved on to a duplex, where he lived in half and rented out the other half.

From there, Brandon began buying both single family and multifamily rental properties, as well as fix and flipping single family homes in Washington state. Later, he expanded to larger apartments and mobile home parks across the country.

Today, Brandon is the managing member at Open Door Capital, where he raises money to purchase and turn around large mobile home parks and apartment complexes. He owns nearly 300 units across four states.

In addition to real estate investing experience, Brandon is also a best-selling author, having published four full-length non-fiction books, two e-books, and two personal development daily success journals. He has sold more than 400,000 books worldwide. His top-selling title, The Book on Rental Property Investing, is consistently ranked in the top 50 of all business books in the world on Amazon.com, having also garnered nearly 700 five-star reviews on the Amazon platform.

In addition to books, Brandon also publishes regular audio and video content that reaches millions each year. His videos on YouTube have been watched cumulatively more than 10,000,000 times, and the podcast he hosts weekly, the BiggerPockets Podcast, is the top-ranked real estate podcast in the world, with more than 75,000,000 downloads over 350 unique episodes. The show also has over 10,000 five-star reviews in iTunes and is consistently in the top 10 of all business podcasts on iTunes.

A life-long adventurer, Brandon (along with Heather and daughter Rosie and son Wilder) spends his time surfing, snorkeling, hiking, and swimming in the ocean near his home in Maui, Hawaii.

Press
Brandon’s writing has been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media.

Follow
YouTube
Instagram @beardybrandon
Open Door Capital

Read More

Join BiggerPockets (for free!) and get access to real estate investing tips, market updates, and exclusive email content.

Sign in Already a member?

This term denotes the percentage of a year that a property will sit empty. It is a very important calculation to include in your numbers when you buy a rental property, but it is also an “average” number that you should consider when determining the best location in which to purchase a rental property. Buying in an area with a high average vacancy rate means that your property will likely be vacant more often. Because vacancy is one of the most costly expenses for a landlord, it would make sense that you would want to buy in areas with below-average vacancy rates.

So how do you find an area’s average vacancy rate? There are three different approaches to finding this data.

The Beginner’s Guide to Real Estate Market Analysis

Before diving into real estate investing, make sure you understand how to compare markets and properties. Whether you’re trying to decide between investing in Boise or Sacramento—or you’re just comparing two similar homes—this guide will walk you through all the numbers you need to know. From calculating cash-on-cash return to running a comparative market analysis, the experts at BiggerPockets demonstrate the steps you need to follow and the statistics you must know with The Beginner’s Guide to Real Estate Market Analysis.

3 Approaches to Finding an Area’s Average Vacancy Rate

1. Census

The U.S. Census Bureau tracks vacancy rates with data points in many areas of the country, including the largest 75 markets in the country. This data is fairly “raw” and will require you to download information to a spreadsheet to analyze it. This data also
does not get down to the level of specific neighborhoods, which can dramatically affect the vacancy rate.

analyze-neighborhood

Related: 3 Little Known Factors to Help Minimize Vacancy Rates

2. Agents

If your specific location uses real estate agents to fill vacant units, you can call in a favor and ask a real estate agent to conduct a comparative market analysis on local rental property stats. This can show you how long currently available properties on the MLS have been vacant. This will also show you how long properties sat before being rented, original listing prices versus rented prices, and other data points.

3. Property Managers/Landlords

The third—and in my opinion, best—approach to finding an area’s vacancy rate is by calling up a local property manager or large landlord (in number of units, not body fat!) and asking them. They should know this number off the top of their head and can probably give you a more accurate picture than either of the other options listed here. Property managers can tell you specifics about which streets or neighborhoods have a higher or lower vacancy, as well as other nuances about locations.

In addition, this gives you the chance to interview some property managers on the phone in case you decide you want to hire one to watch over your investment. What is a good vacancy rate? The truth is that there is no standard right or wrong number, but according to the U.S. Census Bureau, in 2014, the nationwide average was 7.6%, compared with a record high of 10.6% in 2009 and record low of 5.0% in 1981. Your area will likely have a different number, and honestly, that’s OK.

extra mortgage payments

Related: 12 Easy Tips to Reduce Your Vacancy Rates and Find Great Tenants

No matter what the vacancy rate is for your area, the truth is this: make sure you incorporate this vacancy rate into your analysis. Furthermore, know that vacancy rates are largely affected by the way you manage a property. I’ll talk more about the specifics of lowering your vacancy rates later in this book, but consider this: the average vacancy rate in my area hovers around 6%–8%, but in my company, we run under 2% all year round. Of course, when I analyze a deal, I am sure to include a 6%–8% vacancy rate, knowing that I will not always be the one managing my properties so efficiently.

blog ads 03

How do you find vacancy rate? Any strategy you’d add to this list?

Share below!