Whether you’re looking to buy a property or want to optimize the one you already have, your vacancy rate will help dictate your next move. It’s a number that’s trying to tell you something. Learn the value of a vacancy rate—what it is and how to keep it low.
What Is a Vacancy Rate?
It’s a percentage measured over a year that represents how much time a unit is unoccupied. It’s the opposite of occupancy rate—the amount of time a property is rented. A low percentage is good; a high percentage is not. The formula to calculate vacancy rate looks like this:
Vacancy Rate = Number of Days Vacant / Number of Rentable Days
The units might be vacant for several reasons, including:
- A unit is ready to be rented.
- There is a gap between a new lease starting and a former tenant’s departure.
- A unit is not livable.
- A unit is undergoing repairs or renovations.
What Causes a Low Vacancy Rate?
Not all factors are under a landlord’s control. It can be hard to put a finger on why the unit isn’t occupied at all times, but these are a few possibilities:
- The rent is too high.
- The unit is in an undesirable location.
- There are more units in the area than the market demands.
- The unit is outdated or lacks amenities.
- Interest rates are prompting renters to buy property instead.
Why Compare Vacancy Rates?
These percentages don’t exist in a vacuum. Their meaning is relative to similar properties in the same neighborhood or market and how they’re performing. For instance, a vacancy rate in an urban area might have very different conditions and expectations than in a rural community. Local rates might vary because the job market is in flux or a lot of construction projects are under way.
How Can You Lower a Vacancy Rate?
With some good advice and more experience, you’ll learn the most effective ways to make your property more desirable to tenants. You can decrease the vacancy percentage by making the unit as irresistible as possible. Among the measures you can try are:
- More comprehensive and diverse marketing efforts.
- Improved curb appeal—exterior paint, more attractive landscaping, etc.
- More efficient scheduling for repairs and remodeling.
- Incentives to current tenants to sign on for longer leases.
- Better screening for longer-term renters.
- Action on feedback from tenants.
- Strategic property upgrades.
R. Russell Properties has been watching the vacancy rates for rental properties in Orlando, Florida, for decades. We can help property owners by recommending little tweaks that have a big impact on the desirability of a unit. Contact us to find out more about what a vacancy rate is and how to keep it low, and learn how partnering with our property management company can help maximize your profits.