Concerning Occupancy Rates

3 Replies

I am fairly new to Bigger Pockets and Investing in general. My brother and I are looking into buying a home using the BRRRR idea. We are not sure how to go about figuring out Occupancy Rates for the area we are looking at. Is there a web site or even a tool on Bigger Pockets to be able to figure that out?

How important do you think it is to know the occupancy rates for the area and is there a rule to go by. Would appreciate any help I can get.

Thanks

Hi @Jeffery Cass . Welcome to BP. To get an idea of vacancy rates call a few property managers in the area. Knowing this information is very important in your analysis. 

Kevin Trumbull

    Thanks Kevin. Are property managers usually open to freely giving this info out?

    Sure, they are happy to. I just got off the phone with one talking about this right now. But I had to warn him: You don't calculate for 2015. You calculate for interest rates going up and higher vacancy rates. You need to factor in physical vacancies, rent lost to lease (you raise rents but can't raise on people already there), bad debt (not everyone pays), and concessions (free month on move in!)-- pretty soon most people here seem to accept nothing less than 10%. More conservative investors try to use 15%, in a booming city with the right property, some will use 8%--but personally I think you will need real reasons to use that, beyond "I can't find anything otherwise". Because right now, things are way overpriced in the markets I am looking in and there is that temptation, and as far as I can tell a lot of people buying right now are setting themselves up to lose a lot of money. It needs to be a really nice place that is upper middle--not crazy expensive, and in a great area. In 5 years interest rates will be 6%+, and more and more banks are insisting on 5/5 hybrids, so be careful!

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