Landlord · Pensacola, FL · Member since 2012 · 34 posts · 6 votes
Has anyone experienced this, bought the property anyway, and have some wisdom to share?
This property I'm looking at boasts "huge upside potential" if rents are raised to the market; but, they're also showing a 9% vacancy cost in their rent rolls. I've seen this on some other advertisements, and I question why a place would have nearly that much vacancy if they are below market rents.
@Rob Simpson Because a property currently has a higher vacancy does not mean it will stay that way. These are sometimes the best deals where you can add value and increase and/or improve the property.
In the case of the property you are looking at, the vacancy will not concern me if I'm confident I can eventually raise the rents to market and fill the vacancies. This is one of the more straightforward value add items you can do once you acquire the property.
You'll want to find out why the vacancies are where they are at now. Maybe units need rehab or are not rentable. There could be concerns about the area or the property which are causing the vacancies.
So to answer your question, the vacancy does not worry me but I'd want to find out the reasons for it and if it is something that can be solved and still make the deal feasible.
Vacancy is a thoretical concept. Different markets are different. Just prudent to use one month vacancy in pro forma. If you can do better that $$$$s in your pocket.