Real Estate Investor · Irvine, CA · Member since 2011 · 189 posts · 33 votes
When buying houses to buy&hold as rentals, how important is vacancy rate to you guys and how do you figure out what the vacancy rate for an area is anyhow? What size area around the property do you care about in terms of vacancy rate?
Does it really matter all that much, or will lowering rental price get you some one in there no matter what (and you bought @ price considering the lowest you might have to go on rent)
Real Estate Investor · Plano, TX · Member since 2011 · 16 posts · 10 votes
14y
Chris,
I think vacancy rates are very important. I feel it is the most overlooked expense by new investors. The problem with a vacancy is it's a double whammy. You are not getting rent, and you are paying to clean it up and get ready for tne next tenants. Not to mention all the other problems (frozen pipes, vandalism, squaters, etc.)
One good way to measure vacancy rates is to watch when another For Rent sign goes and up in your farm area and count how many days it stays vacant.
Specialist · San Dimas, CA · Member since 2011 · 350 posts · 122 votes
14y
Hey Chris,
The answer is IT DEPENDS on what TYPE of rental you are looking at. Single family homes and multi-familiy are two different animals. In my experience, SFH keep tenants longer (pending landlord mgmt).
I am not saying this is the RIGHT/only way to do things, but I use the following three ways to figure it out when buying a single family home:
1. I calculate one month of vacancy when looking at a property over the first year.
2. I call several property management companies in my market and ask what there experience has been for the target area I am looking to buy in.
3. I calculate 5% vacancy.
My goal is to hit 20%+ cash on cash return. If I can still hit that number after calculating all three of these points in addition to my other criteria, I usually put an offer in.
Homeowner · Burleson, TX · Member since 2008 · 756 posts · 376 votes
14y
If I am figuring my actual vacancy rates, it is a simple formula.
If I want to know my area's vacancy rates I call my local Realtor and I cruise my market and look for "For Rent" signs. I also keep a loose track on trends. If I start seeing more signs the vacancy is going up. I check to see if any employers are laying off or closing.
Vacancy rates and trends are big time numbers to keep track of.
Garberville, CA · Member since 2011 · 184 posts · 6 votes
14y
This site may be useful;
http://www.relocate.org/view/
But I don't know how they come up with their statistics... It may give you a ball park figure though. I found it's easier to search google with "relocate" and the city or county & "vacancy rate" in the search terms instead of the site itself. I've had a few onsite searches that didn't return the vacancy rates.
"Does it really matter all that much, or will lowering rental price get you some one in there no matter what"
Probly would get someone in there, but if an area has a high vacancy rate I'd be VERY careful WHO you got in there. One area we looked at has a 25% vacancy rate, and I believe it actually does have close to that. Lots of smashed out windows and I think the eviction rate is very high also. Window glass alone is pretty expensive.
Another area says 12.5% vacancy but I believe the rate is actually closer to 3% except for houses for sale.
Real Estate Investor · Plano, TX · Member since 2011 · 16 posts · 10 votes
14y
Chris,
I think vacancy rates are very important. I feel it is the most overlooked expense by new investors. The problem with a vacancy is it's a double whammy. You are not getting rent, and you are paying to clean it up and get ready for tne next tenants. Not to mention all the other problems (frozen pipes, vandalism, squaters, etc.)
One good way to measure vacancy rates is to watch when another For Rent sign goes and up in your farm area and count how many days it stays vacant.