What is your true vacancy rate??

Question

What is your real vacancy rate? Do you go back and actually calculate it each year or just have a number in your head? I typically input 8% in the financial calculators before I purchase a property but some are better than others in real life....

Mary M. · Answer

My vacancy rate is effectively zero.    I rarely have vacancies and when I do I generally get a new tenant in within 7 days.

Thomas S. · Answer

"Thomas is in Canada  .. so his marketing rules may be vastly different then the US.. we cant target a particular group thats against the law.."

We are not permitted to here either, it is a violation of our Human Rights and Housing laws as well. I prefer to operate based on what is best for me and have the experience to do it safely.

One of the easiest legal ways to target seniors in screening is to have higher than average minimum credit score requirements. With a B class property all my senior applicants have very high 700s - 800s scores.

Jay Hinrichs · Answer

Thomas is in Canada  .. so his marketing rules may be vastly different then the US.. we cant target a particular group thats against the law..

Ned Carey · Answer

@Mark Hughes I have not figured out exact vacancy rate. In part because we are lax at refilling units. Often we do a fair amount of renovations and we a slow at rehabbing. We could drop our vacancy rate a fair amount just be being more aggressive at refiling units.

That said, I tend to look at it more about how long the tenants stay. Most of the tenants we pick tend to stay 5+ years. It is the tenants we inherit that tend to be more of a problem.  When I do projections for properties I use 8-10% vacancy.

Thomas S. · Answer

@Irina Belkofer

"How do you target seniors - any marketing tricks?"

Targeting seniors is a process. Seniors prefer to live near other seniors. I have multi unit properties making a transition easy based on getting one senior in and then using their network to find more interested seniors. You need to be located near food and drug stores to make their lives easier.

Once you get seniors into your property it evolves over time and you can then be more selective. Keeping in mind that to succeed once you start you can not allow non seniors in. Success depends on  targeting  a specific demographic making it sometimes necessary to discriminate and violate fair housing laws to stay on track. If you are not prepared to do that then you will have difficulty. I have no difficulty doing what is necessary to keep my properties 100% seniors by prioritising goals others may take issue with.

I always place my business first which naturally can be a problem for the more faint hearted landlords out there. I do not recommend this to novice landlords, it is definatly not a business practice suited to all landlords for obvious reasons.

My biggest problem, specific to my rent controlled market, is that they always stay too long.

Joseph T. · Answer

Real life vacancy rate for my current properties is under .5%

Usually tenants stay at least 5 years and I can cleanup, repaint, refurbish the unit within 2 days and have it rented out before a full week comes by.

It helps that the units have luxury finishes compared to the others offered in the area and rent is only $200-250 above the average price.

Mike Dymski · Answer

I have my bookkeeping set up where Vacancy and Loss to Lease show up on my monthly P&L.  I use 3rd party management and the cost of vacancy and repairs are important...their fees are a distant 3rd.

I am running 7%.  We have been re-positioning units...and am now using 3rd party PM; otherwise, it would be lower.  When I was self-managing, I would have units re-rented within a week.

Irina Belkofer · Answer

Vacancies mostly depend on how improved is the property - condition. When everything is new, shiny, full house of appliances (including washer/dryer), then it's easier to rent quickly. The more dingy the house, the longer it sits on the market.

8% on average would be a good estimate but presisely depends on the property - some have zero, some just don't get rented for a month or two.....with no apparent reason (great condition, lower rent than others, same location).....but every time I have to re rent it - it just doesn't want to be

Llewelyn A. · Answer

Like @Mary Mitchell my vacancy rate in Brooklyn, NYC, is effectively ZERO.

I have been owning rentals for 21 years, currently have almost 30 apts with about 70 tenants.

I estimate that I probably lost around 5 months of actual rent in all of these years.

The vacancy rates are so low, it is SUB-4%.

Normally, I will get a 45 day notice from the tenant leaving. It takes less than 2 weeks to find a qualified tenant and process them through a rigorous tenant screening process.

Even in situations where there will be some re-painting and some renovations, the tenants are just happy to find a secure, good apt in a safe and trendy neighborhood.

When I build my Business Plans, Vacancy cost is projected to be ZERO in my investment localities.

If a friend or relative invests in a different location, then I look at the asking rent versus the Fair Market Rent (FMR).

If the asking Rent is approximately the same as the FMR, then, depending on the vacancy rate of the target area, I would estimate 1 month vacancy allowance.

IF the asking Rent is significantly below the FMR in a highly dense locality, then there is no point on adding a vacancy of any significant value.

I once had an apt with a FMR of $3k per month. I mistakenly put $2k on my ads.

Within HOURS, I got so many calls, emails and texts, I knew something was wrong! I corrected the Ad and had about 100 responses for the typo ad.

It really should be obvious that Vacancy is dependent on 3 factors, 1) the Asking Rent versus the FMR ,2) How dense is your rental Market and 3) What is the current vacancy rate in your target area.

If you build your Business Plan with these details, you will be surprised how accurate they can be.

Nathan Gesner · Answer

I've managed to keep vacancy under 5% with rare exceptions on higher-priced Class A or B properties. I think it's important to crunch the numbers if you're in a more competitive market but I don't find it necessary for my situation.

What is your true vacancy rate??

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