Updated 3 months ago on . Most recent reply
Vacancy Rate - what % to use?
Help please - new to running the calculators. How do you know what % to enter for vacancy rate and maintenance? I don't think we'll have any vacancy (so much interest already and I have a tenant). We are BRRRR-ing so should be very little maintenance after completed. Would appreciate some guidance...thx!!
Most Popular Reply
Really common question for people just getting started with the calculators. The most important thing to understand is that vacancy and maintenance are not just about what you expect to happen, they are about protecting yourself when things do not go as planned.
Even if you have a tenant ready to go, you should still use at least 5% for vacancy. Tenants move out, life happens, and you will have turnover eventually. Most experienced investors use 8 to 10% as a standard. On maintenance, a freshly rehabbed BRRRR is a great situation but 5 to 10% is still the right number to use because systems age, appliances break, and small things add up faster than you think. The calculators are not meant to reflect your best case scenario, they are meant to tell you if the deal still works when reality hits. If a property only looks good when vacancy and maintenance are zero, it is not a good deal, it is a hope.