When you’re looking to purchase rental properties with the goal of cash flow and positive income, there are a few driving factors to consider. One of the most important aspects of a property is vacancy rate.
On today’s show, I’ll elaborate on what a vacancy rate is, what factors influence the rate, and the range of vacancy rates I look for in a high cash-flowing property. I’m also sharing a specific formula to determine vacancy rate. Don’t miss this episode of Investing in Real Estate!
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A vacancy rate is a percentage of unoccupied rental properties in a given area. This can apply to the number of apartment buildings in a complex, as well as the number of houses in a city. I like to think of vacancy rate as the ratio of rental units unoccupied vs. the total number of rental units.
A high vacancy rate indicates that properties are not renting well. The higher the vacancy rate, the worse the market tends to be. You don’t want to purchase properties where the vacancy rate is high, so you’ll have to determine the exact rate in order to make a well-informed decision.
For example, if there are 300 available rental properties in a market, and 25 are vacant, you’ll want to divide 25 by 300. This formula will give you a vacancy rate of 8.3%. I find that to be high, and would not purchase a property in that market.
On today’s show, I’ll get into specifics about vacancy rates. I’ll give you specific numbers to aim for, as well as elude to which markets are the most and least profitable. I’ll also talk about the link between vacancy rate and ROI.
If you’re ready to begin building a passive income through rental real estate, book a FREE call with my team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.
On this episode you’ll learn:
- What is the national vacancy rate average?
- What are two major factors that increase vacancy rates?
- Which cities hold the highest vacancy rates in the US?
- And much more about rental real estate!
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