Author Topic: Vacancy Rates  (Read 873 times)

saijoe

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Vacancy Rates
« on: August 04, 2020, 09:15:51 AM »
Thinking about dipping my toes back into rental properties.  Did it back in the 90's when I was younger and dumber and my experience wasn't great.  But my current situation is much more stable and I'm ready to get back in, I think. 

I am working with a real estate person, and perhaps she can provide some insight, but I do want to do some external research on my own as well.  My question is "Is there a website out there that gives some insight into vacancy rates in a certain area?".  My biggest concern is extended vacancy time.  I'm looking into fairly inexpensive properties in working class neighborhoods. 

anni

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Re: Vacancy Rates
« Reply #1 on: August 04, 2020, 10:23:13 AM »
I'm no RE professional so take this with a grain of salt. But I've been looking to move recently, and it seems like on Zillow, "number of contacts"/"number of applications" for units like the ones you're thinking of will help give you a sense of how hot the rental market is there. (I've been looking into kind of hot seasonal markets, though). You have to look at each place manually, but it's a bit of free information.

Evie

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Re: Vacancy Rates
« Reply #2 on: August 04, 2020, 11:06:31 AM »
I'd be pretty reticent to get in right now. See my other thread I just started on what people are seeing on vacancies this fall.  There are a lot of unknowns. A lot of states have eviction moratoriums so you run the risk of taking on a mortgage and then having tenants who can't pay, and while they are supposed to still owe the money most renters who fall multiple months behind aren't suddenly going to come up with the money. 

If you see a good deal, have high cash reserves and especially if you can do something like a duplex owner occupy to get a better rate while having a place to live that you can carry on your own (with the added bonus of buying down your monthly if a renter works out) that might give you the most manageable scenerio.  But managing a rental and properly screening tenants can be a big PITA and if you are worried about vacancies I expect more not less volatility on that front in the next few years.

I would also only do it in a really strong rental market, where even with more vacancies the market will remain strong and the trade off is the deals tend to be less great in those areas.   

sammybiker

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Re: Vacancy Rates
« Reply #3 on: August 04, 2020, 12:01:26 PM »
Managing yourself or w/PM?  Properties are near you or long distance?

My vacancy is <5% long distance with a property manager when I stay on them.  If I was managing myself, this would be <2%.

*This is for a stabilized portfolio. The first couple of years getting everything ironed out skew the data, especially when doing full gut rehabs.

**I don't know of a good online resource.  I would contact a few local property managers and see what their renters list is and what their feedback is on demand.  I have (3) PMs across (2) very different economic driven states and all have lists of renters waiting on properties in decent areas and school districts.

I find most of my vacancy stems not from lack of renters but the lack of urgency during turnovers, when one tenant moves out, water/utilities need to be transferred, inspection done, clean-up, paint touch-up, minor repairs, list and then showings.  That's where the bulk of the vacancy comes, especially when PMs are involved. When managing yourself, barring major repairs or renovations, you can sequence everything so that there is almost 0 downtime.

SndcxxJ

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Re: Vacancy Rates
« Reply #4 on: August 13, 2020, 08:57:31 PM »
I'm no RE professional so take this with a grain of salt. But I've been looking to move recently, and it seems like on Zillow, "number of contacts"/"number of applications" for units like the ones you're thinking of will help give you a sense of how hot the rental market is there. (I've been looking into kind of hot seasonal markets, though). You have to look at each place manually, but it's a bit of free information.
I like this method too and I use this to determine my rent prices versus the market.  One thing to be aware of with zillow's functionality though, the "number of contacts" sometimes does not display properly.  I'll have a vacancy where I've been contacted dozens of times and the "contacts" number shows zero.  Other times it works pretty well.
For example, (I just looked) I have two Zillow rental listings running right now.  One shows 59 contacts (seems about right), the other shows zero (definitely not correct).

It's still a good feature to look at but take it with a grain of salt.

redman77

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Re: Vacancy Rates
« Reply #5 on: August 16, 2020, 04:59:17 PM »
My preferred free method for assessing rental property vacancy rates is to monitor Craigslist for similarly sized units over a two-week period. If you spend 5-10 minutes checking the same search results daily, you'll soon get a feel for whether listings are getting stale, if landlords are lowering asking rents, etc. If the number of search hits keeps rising over time, that's a good sign that it's trending towards more of a renter's market.

Alternatively, if you want a faster answer and don't mind spending a few bucks, usually $15-25 per report, you can get a "market rent estimate" online for just about any address and unit type. These reports generally include current vacancy rates, as well as historical vacancy trends over time.
« Last Edit: August 16, 2020, 05:03:33 PM by redman77 »

clarkfan1979

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Re: Vacancy Rates
« Reply #6 on: August 18, 2020, 09:02:18 AM »
If you are buying rentals in working class neighborhoods most people assume 8% vacancy.

I have two college rentals and my vacancy rate has been 0% since 2007. Everyone always moves out on July 31st and new people move-in on August 1st.   

I have one non-college rental that is two units. The downstairs unit has had a 0% vacancy over the past 2 years. I have been renting the upstairs for one year. The upstairs was vacant for two weeks during the last tenant turnover. However, that was somewhat self-inflicted by myself on purpose.

I had two separate groups that wanted to move in asap that would result in 0% vacancy. However, I ended up renting to a ER doctor because he was moving to the area to help with COVID-19. His move-in date was two weeks later than the other two groups, which included two weeks of vacancy. I bit the bullet and rented to the ER doctor. It seemed like the right thing to do at the time.

abstractartifact

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Re: Vacancy Rates
« Reply #7 on: August 18, 2020, 01:01:01 PM »
I find most of my vacancy stems not from lack of renters but the lack of urgency during turnovers, when one tenant moves out, water/utilities need to be transferred, inspection done, clean-up, paint touch-up, minor repairs, list and then showings.  That's where the bulk of the vacancy comes, especially when PMs are involved.

agree 100%. have the same sub-5% vacancy in working class neighborhoods and it isn't because there's no interest. it's all about the time it takes to turn the units.

JoeV914

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Re: Vacancy Rates
« Reply #8 on: October 06, 2020, 09:56:02 AM »
Make sure you’re finding out about economic vacancies as well

clarkfan1979

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Re: Vacancy Rates
« Reply #9 on: October 07, 2020, 07:24:08 PM »
This is an extreme example, but I'm installing 2200 sq. ft. of flooring with 0% vacancy. The carpeting was getting old, but still usable. I struck a deal with the tenants moving out. You don't have to clean the carpets before you move out if you give me 7 days to install new vinyl plank flooring. I did about 800 sq. ft. in 7 days. I also struck a deal with the new tenants. I will let you have 2 dogs if you let me install new flooring. I installed another 800 sq. ft. in 7 days. I'm doing the final 600 sq. ft. over winter break when the tenants are out of town (Dec 15-23).