Vacancy Rate Analysis

2 Replies

Hi .. I'm just starting to look into real estate as an investment and I'm trying to understand vacancy rates.  The town I'm looking at, all data states an 11% vacancy rate but if you look closer, the Houses for rent show a < 3% vacancy rate.  Is this the number I should be looking at?  What sources do you use to look at vacancy rate?

Hi Lisa! 

I've got no experience with investing yet so far but I'll give you my knowlegde so far. In a situation like this it only takes a phone call to any real estate agent nearby. They're the ones who knows the best up to date numbers. Getting numbers through online can sometimes be sketchy and out of date at most times. 

But if you're only trying to find a rough estimates to use it to calculate for your potential property then I'll suggest you to research what the crime rate is. Or what is the population in that area. Or what the median income of that area is. Remember people with less income usually tends not to be a long term tenants, which can mess up your vacancy numbers. 

In the case of estimates, I usually put it in 5% in my neighborhood. But if you feel that those criteria isn't met, then maybe increase your vacation rate. It doesn't hurt to be a little conservative. 

All the best Lisa! :))))))

Amir is probably right, unless you are getting data from the regional mls website, you may not be getting the right numbers. A number of sites pull from the mls, though. Any property management firm would be happy to talk to you about the numbers, what areas they find are easiest to fill, etc. they would love to have you as a client...and will in their own best interest should sway you from investing in what they consider problem areas (but of course you never know what incentives are out there...meaning how they make money...most pm swear they would rather everything work like a clock and forfeit late fees and turnovers and I can believe them as it is a lot more hassle for the money). There is also the vacancy rate by property class...however, in my market there seems to be tenants in every range for a variety of reasons.

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