Establishing a Rental Vacancy Factor

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This article published by ForeclosureDataBank.com touches on the important subject of the rental vacancy factor in a neighborhood and what thismeans for a new real estate investor.

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Establishing a Rental Vacancy Factor

  1. 1. Establishing aRental VacancyFactorIf you buy a property to rent out and thereby Contentscover your repayments, it is important not to Introduction....…......…............……1assume that it will be fully occupied. This is Vacancy Definition......................…2because no property ever is, and yours is unlikely How the Rental Vacancy Factor isto be the sole exception. Speculators base their calculated..........................................2estimated rental income on the average rates of A Powerful Tool..…........................3vacancy for an area over time – this is called therental vacancy factor.
  2. 2. 2 A Definition of “Vacancy” A “vacancy” is the period when a property is standing unoccupied, or, otherwise, not receiving rent. It could be up for sale, or waiting for a tenant to sign a lease and move in. There are two subsets. A Market Vacancy is the number of units open to rent. Economic Vacancies are occupied properties not yielding direct income, for example, show houses and manager’s homes.How the Rental Vacancy Factor is CalculatedThe factor is an expression of the percentage of all units in an area that are unoccupied during aspecific period. These rates can change from time. Hence, it is better to examine trends, as opposed toa single point in time.Interpreting the ResultProperty rental factors are an expression of the ratio betweensupply and demand, as are most things in business. However, thequantum of the average rental affects the ratio too. An area with ahigh vacancy rate indicates that either average rental is too high forthe market to stand, or that some other factor is chasing tenantsaway. It is essential to interpret this correctly.
  3. 3. 3 A Powerful Tool Used with insight, a rental factor is a powerful tool in the hands of any property investor searching for opportunities on ForeclosureDataBank.com - whether buying to occupy, or for renting out. This because it is a superb way to estimate return on capital over time, and return on capital is what investment is all about.Foreclosure DataBank It can also disclose that people are moving away from the area,1602 Alton R oad #432 and that, if there ever was, is a warning sign to note.Miami Beach, FL 331391-888-596-9279contact@ foreclos uredatabank.comThe bigges t foreclos ures databas e on thewebFind us on the W eb:www.Foreclos ureDataBank.com

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