Apologies if I may have posted this in the wrong section of the forum. I am trying to figure out a solid base percentage to account for in unit vacancies in the New Rochelle / lower Westchester market.
Any and all feedback is greatly appreciated!
I think it depends on your analysis of the market and your own risk tolerance. I personally go with ~15% based on the type of property and tenant class I am looking for.
@Aneury Evangelista thanks for the help. I have heard ranges vary anywhere from 8%-20% depending on the local market.
I have also considered factoring a 0% vacancy into the equation and instead only accounting each unit to be able to collect rent for 10 of the 12 month a year. This allows be 2 months of vacancy for each unit already built in. Any feedback on this method?
@Matthew Rodriguez what you've just described is essentially how you come up with a vacancy factor. Your logic comes out to be roughly a 16.7% vacancy (2/12 month vacant). Sounds like a solid plan for your area.
Lower Westchester and NYC have some of the lowest vacancies if your units are priced right and in nice condition. I would go with an 8% in these areas. If you give out 2 year leases and have a clause in your lease that states you can start showing 30 days prior to their end date if they don't renew, then you can try to reduce vacancy as much as possible.