All Forum Posts by: Dmitri K.

@Account Closed, thank you for the feedback!

If a park has other sources of income - one in particular that comes to mind is self storage. How would you value that? Economics and dynamics of self-storage are different and i am not sure if it would be fair to apply the same cap rate to the income that self-storage is currently generating while evaluating the park a s whole. Thoughts? 

I am also thinking that self storage will require more attention from the manager, hence higher manager expenses.

@Andriy Boychuk, i am in the same boat. Except i am just starting to work on the list. California is too expensive, but i will still try. Neighboring states - Nevada, Oregon (unless the park) is a 3-4 hr drive from me is pretty much the same as something in the mid-west, where i would have to catch a plane to get there. So i guess it comes down to whether or not the state supports the CAP rate that you are targeting, and then deciding on a deal per deal basis.

But i would definitely stick to my home state whenever possible.

Thank you ,

@Timothy Murphy III, so sounds like the general consensus is that sub 10% is a very realistic number for a vacancy rate. With that, people should still keep in mind that there is a renter placement fee that is often left out in a lot of deal analyses. 

@David Terbeek, @Tom Ott - thank you for feedback. This is the kinda data i am looking for.

I think i should have been more clear in my criteria. There will be variation between singles and milti-families, aslo the city vs the suburbs. Even within the city there will be variation based on where you are East vs. West. So it's good to hear data for a specific sub-market. This would also help new investors decide where to go. Is it worth going to suburbs and enjoy a lower vacancy, but pay more in taxes and home price vs being in the city.

@Account Closed, i agree that if a property condition is not on par with competition one will experience problems finding tenants, etc. Same goes for really bad property managers. Investors that experience those issues (and don't address them ASAP) will most likely go out of business in a short while. So those are valid points, but it's not what this thread is about. I am not looking for outlier numbers. I am sure there are people that own 1 house in Cleveland and self manage, that might say that they have the same tenant for 10 years. However for a lot of seasoned investors that's not the case. We all experience evictions (regular eviction will most likely translate into a 2.5 month vacancy for that year), break-ins/vandalism, etc. And all that adds up. Thats why i asked for a real-live number for those that have a good sample size of properties and been in the area for some time.

@Account Closed, i think i see your point. It's probably not fair to bunch up a PM finder's fee into a vacancy rate, even though, technically your property is making you $0 that month. So i agree with you on that.

However, my question still stays - it realistic to achieve a sub 10% or even a 5% vacancy? This is pretty much what a lot of deals that are being catered to investors would have as a line item. Are those realistic for a remote investor? 

@Geoffrey Schnake, yeah, thank you. I can see how that's possible. I have a local tenant, took 1 week to place, $0 PM and going on the 4-th year. 

@Geoffrey Schnake, so you manage your "residents" remotely? Do you still use a part-time person to at least do the tenant placement and showings? I'd love to know how that's done.

I realize it's possible to do a much better job when doing self-managing. But it's only feasible/scalable up to a point.

@Account Closed, thank you for feedback. You must have a stellar PM to be able to place a tenant in less than a week :)! What you are describing is an ideal scenario, which i would like to achieve. But even for that case your tenant would have to stay for another 2 years to be anywhere near 5% vacancy.

Good luck on the duplex!

So i see a lot of people ask what to use when estimating a vacancy rate or a cap expense rate. And a lot of times on pro-forma sheets a vacancy is listed at 5%. I just can't comprehend how that is a realistic number for the Cleveland area. I would like to hear from local investors what their actual vacancy is.

If your PM charges you 1 month fee to place a tenant, plus it takes 1 month to clean and find a new tenant (and this is the best case scenario), you are out of 2 month of rent for that year.

With that, in order to achieve a 5% vacancy your tenants need to stay for at least 3 years!!!

If you have an eviction(a very likely scenario in the Cleveland market), or if your PM does not give a timely 3-day notice. If tenants do more damage and it takes more to repair and clean up. If it takes more that 1 month to find a new tenant then your vacancy number gets progressively worse. 

So really, what are you guys getting? Is anyone at 10% or below?