Vacancy Rates - Vacancy shows the current number of un-rented units.
How do you calculate the vacancy rate?
This is typically calculated on an annual basis and is shown as a percentage.
Multiply the number of vacant units by 100.
Divide the result by the total number of units in the property.
For example, if an apartment with 10 units has two vacant units, you would multiply 2 x 100, giving you 200. Then divide by 10 units for a 20% vacancy rate.
Why are vacancy rates important?
Vacancy rates are ultimately aimed to be kept as low as possible, but they will always happen and need to be accounted for. A sound investor can not rely on a tenant to pay on time and to stay in and maintain the premises in a satisfactory manner. Ultimately, a vacancy rate needs to be accounted for and a percentage or dollar amount should also be set aside for repairs and maintenance to the property.
When evaluating the investment, it’s important to know the market’s average vacancy rate so you can compare it to your potential investment. Sometimes there is room to add value to a property. This can work to help decrease the vacancy rate from properties that typically were not managed well or have room for improvement.
Some ways to add value to a property can include:
Improve the interior of the units
Improve the curb appeal
Make upgrades to the mechanicals of the property making them more attractive sustainably
Offer more amenities
Improve any common areas
Add or improve property management services
How can Seaport Commercial help?
Taking all these points into consideration, are there any areas of improvement you can do with your current investments to minimize vacancy rates? At Seaport Commercial, we are always looking to help our investors maximize their returns. Give us a call so we can add value to your portfolio!