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.

1. Establishing a
Rental Vacancy
Factor
If you buy a property to rent out and thereby Contents
cover your repayments, it is important not to
Introduction....…......…............……1
assume that it will be fully occupied. This is Vacancy Definition......................…2
because no property ever is, and yours is unlikely How the Rental Vacancy Factor is
to be the sole exception. Speculators base their calculated..........................................2
estimated rental income on the average rates of A Powerful Tool..…........................3
vacancy for an area over time – this is called the
rental vacancy factor.

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 Calculated
The factor is an expression of the percentage of all units in an area that are unoccupied during a
specific period. These rates can change from time. Hence, it is better to examine trends, as opposed to
a single point in time.
Interpreting the Result
Property rental factors are an expression of the ratio between
supply and demand, as are most things in business. However, the
quantum of the average rental affects the ratio too. An area with a
high vacancy rate indicates that either average rental is too high for
the market to stand, or that some other factor is chasing tenants
away. It is essential to interpret this correctly.

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.
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