Can you tell me what percentage you use to estimate a vacancy rate in residential properties ?. Would 3% of the rental be reasonable or is 5% nearer the mark?
Hi Helen
We first learnt about vacancy rates while renting in Darwin. At 2% the owners had it good as most places got snapped up quickly but when the rate rose to 5% it became a renters market and owners may have to drop their rent to attract a tenant.We have rented now for about 12 years and found this to be fairly true wherever we go.
Erika
So i assume what you mean by working out the vacancy rate is that if you were renting for $150 a week, then the vacancy rate would be around 5% *150, which is 7.5%, is this correct?
So your basically saying it is all about your own judgement as to what the vacancy rate actually is, there is really no way of accurately working it out obviously?
Hi
Most PM can tell you what it is. You can also watch for youself how fast properties come onto the market and then get rented, if they are rented as soon as available then the rate is normally low. If you talk to the PM you might find out if sometimes of the year are better than others like if you are near a uni at the start of the year lots of people are looking for accom.
Erika
Thanks Erika, I am just acquiring as much information as I can before really stepping into the property market, probably alot of the time at the expense of my reputation, lol[]
1. When I consider a property I always factor in a vacancy rate as a safety margin, no matter how good the property and how much demand there is for rentals. I use 5% of the gross revenue(rent).
2. The other consideration of vacancy rates is the current level of empty rental accomodation in the area you are looking. Do some research with local letting agents to get a feel for this factor.
Regards,
Shane
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