On paper, vacancy seems like a simple concept. Are there people living in your units?
But it's a little bit more complicated than just that. There are two types of vacancy... Physical and Economic. Now obviously, you don't want either. But, is one worse than the other?
First let's breakdown the difference between the two:
Physical vacancy is a term that most are familiar with. It's when your unit(s) are physically vacant. Meaning nobody is living there and paying rent.
Economic vacancy is a little bit more dangerous because it often catches people off-guard. In this situation, you DO have people living in the units, but you're not collecting rent from them, for whatever reason. They could be refusing to pay until something is fixed. They could be constantly asking for an extension. Or they could just be flat out dodging your calls and letters.
When you're looking to purchase a property, one of the first things you're going to want to look at is the building's vacancy. And there are several ways to find out exactly what the situation is, and if it's a hot mess that you want to avoid.
So check out this week's episode of Multifamily Investing Made Simple, where we make vacancy simple.
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