Vacuam is Latin for empty space. In the property management business we live and breathe around occurrences of empty space. Reality is that empty space is “non-revenue” producing. And, since our fixed costs of operations revolves around revenue generation eliminating vacancy is the best method for increasing revenue.
How do we disrupt vacancy? Prior to disrupting vacancy you have to know where it’s coming from. The first order of business is to determine the source of vacancy. Next, we need to know average vacancy and then aggregate vacancy.
Vacuam is Latin for empty space.
Vacancy Source. Is the issue with credit quality or some other factor? Are residents remaining for the entire term of their lease or leaving early? If leaving early…why? Is maintenance being addressed timely or never? Are there competitive assets offering super incentives? Has street traffic increased or decreased significantly in recent months?
Average Vacancy. What are the average number of days vacant monthly for each asset you manage? How long is a newly vacated unit vacant? What is your turn time? Are you prepared for vacancy as it occurs?
Aggregate Vacancy. Here is the scary number that you must know: how many days vacant at each asset each month multiplied by the most recent twelve months? Is this number 100? Is it 1,000? Multiply this number by the average revenue per unit per day and this provides the vacancy loss number in dollars.
Granted, this is the tip of the larger vacancy iceberg as we haven’t added in concessions, evictions in process, renovations and off-line units. Starting with vacancy source, reviewing average and aggregate vacancy will point you towards areas of concern allowing management to align action steps against the biggest offenders.
Mr. Wilhoit is the author of two books: How To Read A Rent Roll: A Guide to Understanding Rental Income and Multifamily Insight Vol 1 – How to Acquire Wealth Through Buying the Right Multifamily Assets in the Right Markets.
For information on property management audio courses, books and our live weekly leadership academy, visit PowerHour Books and Courses page at http://powerhour.com/propertymanagement/booksandcourses
For 2 property management audio courses, 3 books and live weekly leadership academy–surf here, http://powerhour.com/propertymanagement/booksandcourses
About This Blog
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. http://www.MultifamilyInsight.com