High Vacancy on Apt. Complexes Investor Analysis

[William Tomp]

I'm just looking to get an opinion.

As investors or property managers, do you completely avoid neighborhoods with high vacancy rates, or would you consider purchasing an apartment complex in a neighborhood with high vacancy rates if the price is right?

There is one neighborhood I'm looking at where the vacancy rate is roughly 29%. The property I'm looking at is currently at 60% vacancy. If I were able to bring up the property to neighborhood averages, there would be huge cash flow and NOI Increase. The property needs a lot of capital improvements and can be purchased at a deep discount due to seller COVID panicking. The neighborhood is decent (B, maybe B-) just a little distant from the city and lower population density. All other things being equal, is this something I should look further into or is it something you'd recommend I steer clear of?

[William Tomp]

@Evan Polaski Thank you, that's a really informative response and has me thinking on multiple levels. I'm seeing that if the vacancy rates are trending in the right direction, it could end up being a really great investment over time. On the other hand, if the property itself is overrun with bad tenants and has a bad reputation, it may be costly and difficult to change that. I've been spending so much time looking over the numbers on these properties but neglecting the story behind the property and that needs to change.