Vacancies are part of the business in multifamily real estate. People move out for all sorts of reasons, resulting in open units – units that aren’t making money if they remain empty.
That’s why it’s important to know what your vacancy rate is. Now, you may think you can just ballpark that number. That’s a big mistake. You should have the number down to help you project profit and plan accordingly. That’s where a vacancy rate calculator can come into play.
Here are our best tips on using a vacancy rate calculator for your property and how it ties into virtual leasing.
What is a vacancy rate calculator?
Let’s start at the beginning. What is a vacancy rate? What is a vacancy rate calculator? Why does it matter? Oh, and how to calculate vacancy rate for a rental property? We can help there, too.
The apartment vacancy rate is the percentage of time a property income is lost due to a property being unoccupied. Otherwise said, it’s the ratio of vacant units or income as compared to the maximum potential. Calculating your rental vacancy rate can be done in two different ways. It can be calculated at a single point in time, a current rate, that’s usually shown as a percentage. You can, and should, also calculate it over time to see your average vacancy rate. That can help to examine trends and see year-over-year changes.
So, how do you do the math? Most multifamily communities look for a vacancy rate that will show the current number of vacant units in real-time. Here’s how to calculate the current physical vacancy rate of multifamily properties:
- Multiply the number of vacant units by 100.
- Divide the result by the total number of units in the property.
For example, if your property has 20 units and of those, four are vacant units, you would multiply 4 x 100. That comes to 400. Then divide by 20 units for a 20% vacancy rate.
Why is that important? So you can determine your property’s performance and plan accordingly. At any given time, vacancies are expected. A vacancy rate calculator can help determine what is a good vacancy rate or what is a high vacancy rate for your property. Clearly, a high vacancy rate isn’t a good thing. However, there are things you can do to help keep that rate right at or close to where you want it. Virtual leasing can help with that!
Virtual Leasing and Vacancy Rate Calculators
It may feel like these two things aren’t naturally linked, but they are more connected than you think. We know virtual leasing is effective. To know how to best use virtual leasing and video real estate tours, you need to know your vacancy rate – how many units you need to be leasing – and then you can start planning your leasing activities accordingly.
If you know that there are certain units about to become vacant be sure you can shoot video content if you haven’t already for that specific unit or floor plan while it’s being turned. If you already proactively have footage of that floor plan or unit, you can start getting ahead of the game. You can share that video footage with prospective residents, getting out ahead in the leasing process.
For example, if you know a resident is moving out on December 1, you can work on leasing that unit well before that date. Then, you can, hopefully, have a signed lease and resident ready to move in shortly after that date. That helps to minimize the time the unit is sitting vacant and on the market, which, in turn, will keep your vacancy rate lower.
In the end, when it comes to why a vacancy rate calculator is important, it’s about planning your business accordingly. Operating a multifamily property is an enormous task. Often your attention is split in hundreds of directions. By running the vacancy rate math, you’ll know where your focus needs to be. You’ll know how long a unit has been on the market and how many units you have vacant. Having up-to-date numbers showing exactly what you’re operating with on a day-to-day, week over week, and month over month basis is absolutely critical for managing your leasing processes.
With virtual leasing in your corner, those vacant units can be leased before the current resident even moves out. That will keep your vacancy rates low, shorten lead-to-lease ratios and keep your bottom line right where you want it.
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