Columbus, OH · Member since 2012 · 42 posts · 0 votes
Hello,
Hi guys I am considering moving to an area that has a rental vacancy rate of 8% and possible investing in some multi family homes. From my research 8% is pretty descent, any advise on the vacancy rate? also what's is considered a descent vacancy rate?
There are certainly areas that have higher and lower vacancy rates but a good property owner/ manager will either do better than the market vacancy or worse so I wouldn't only base it on vacancy rate. What is the cap rate for properties, what is the potential for appreciation, what are future prospects for the area and more importantly what are your goals for the money you are investing. vacancy rate is just 1 factor among many
Shema - I always wonder, too, if the vacancy rate I experience with my properties is "typical".
I have 16 units and my vacancy rate over the past 3 years has been 4.2% - which translates to about 15 days/year of vacancy. For me, the loss of income isn't as painful as the turnover costs associated with getting the unit back in order to rent, advertising, showing the unit, etc. That is the real killer in my book. For me the 15 days lost rent pales when compared to the other costs.
An 8% vacancy rate means each unit will be vacant 1 month out of the year on average. In other words, on average each tenant will leave after their 1 year lease is up. This sounds a bit high to me but I am not familiar with the area you are thinking about buying in.
Of course the type of property you are buying also plays a part in turnover. I know some might disagree, but in my experience, in general multi-family properties will experience higher turnover than SFHs. Still, 8% would be a little high for my liking - I don't want to turn-over each unit every year. I make it a point to develop a good relationship with tenants so that they want to stay. It is a win-win.