1) Is there a website or means of acquiring average vacancy rates in a particular area?
2) What is the best way to figure out if an area will rent out a multiunit?
I am in the end stages of building an 8 multi-unit building and am doing my due diligence.
I would do my own research. Ask around in that particular area, understand who the renters are (group of students near a university? military ppl near a base?), and make your own judgement I'd say.
Absolutely. I also thought I had heard there was a place to find vacancy rates in a particular area online?
@Bill Gulley Maybe Bill can help!? :)
You could call local banks and speak with commercial lenders. For the area you will get a consensus of what vacancy rate is normal for them to lend on for 5%,10% vacancy etc.
Also you could get a PM company to give you a report in exchange for hoping to earn your business.
When you say end stages what does that mean?? Are you almost finished with construction of the building, have just bought the land, have a construction loan from a lender, or have just gone through a case study but have not moved further than that yet??
8 units is small and the grey area. It's too big for 2 to 4 units and just above the five plus mark so data is spotty on those. Is your goal to hold this or sell off to an outside foreign investor?? Example you build for a 9 cap all in but sell for a seven once finished and leased up.
Ask as Joel suggested. Your local board of realtors can be a good source for data and drill down by zip codes or neighborhoods. Consider too that you have new units, to marketing that will be a plus, but future vacancy will probably follow the norm in your market. :)
If you handy with Google (usage of specific key words) you can find published documents on the web. For example i was able to locate a document with the Economic Development Co for our county that has commissioned a large RE Broker firm to do a research with in the area. That document did not only included trend analysis for rental properties, but population growth(loss) predictions job statistics, type jobs percentage home ownership and predictions....etc..
Do a little online digging and see what happens. It did toke me i think 3 -4 hours of online research to find statistics that in needed.
You could start with words like "demographics data", " occupancy rate", etc.. Even if you find a document that does not meet your needs, because wrong location or outdated info, you should still glance at it to help you come up with better key words. So you can focus your research on item that you need.
If you have patience you can even find unclassified research documents that REITs managers uses.
Good Luck to you!
@Joel Owens Great to meet you and thanks for the info! By "end stages" I mean I have the private money lined up, a guy desiring to sell me the property which needs a full gut, and an estimate with a great contractor. Its looking like acquisition is 25k (shells) with 75k for remodeling which is cheap (good friend of mine) and market rent for 2/1 is $1000/m and 1/1 $800/m. Property will be 6 units at 2/1 and 2 units 1/1.
So maybe I am at the beginning of the end stages!ha Yes 8 units is small, but a start! I plan to upgrade next time and hopefully end up in much larger buildings within a few years. I have A LOT to learn first though. I am attempting to jump in head first without cracking my skull :/. All the research is attempting to build a helmet.
@Bill Gulley Thanks Bill! Yes, that was an idea I had and have been contacting real estate agents in the area. Its been rough drilling it down to the neighborhood or zip code. I am still searching and calling around :/.
@Val Csontos It is nice to meet you, your in MD, I love Annapolis... Yes I looked a bit online through keywords and did not get too far. I will continue to peruse the internet but thought I would try my friends on biggerpockets!
You can also go to the local commercial brokerage websites for market reports. CBRE cushman, NAI, whoever is in your market.
I found this website when researching statistics about various markets. I can't vouch for exactly how accurate it is, other than to say that the numbers that I did verify with other sources seemed pretty darn accurate.
For example, it has vacancy rates for the Baltimore area:
Unfortunately, it only goes up to 2012. For more recent data, you can try searching 'baltimore vacancy rate' and see what comes up. I've found that some metro areas have articles online that mention recent quarterly vacancy rates.
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