A couple months of vacancy, a soft rental economy, or a major expense could eat up your equity.

It's an important metric as it gives you an idea of how long it may take you to fill a vacancy. 

Deduct NEW property taxes after you buyDeduct home insurance costsDeduct maintenance percentage, typically 10%Deduct vacancy+tenant nonperformance percentage(we recommend 5% for Class A, 10% Class B, 20% Class C, good luck with Class D)Deduct whatever dollar/percentage of cashflow you wantNow, what you have left over is the amount for debt service.Enter it into a mortgage calculator, with current interest rate for an investment property, to determine your maximum mortgage amount.Divide the mortgage amount by either 75% or 80%, depending on the required down payment percentage - this is your tentative price to offer.If the property needs repairs, you'll want to deduct 110%-120% of the estimated repairs from this amount.Be sure to also research the ARV and make sure it's 10-20% higher than your tentative purchase price.As long as the ARV checks out, this is the purchase price to offer.It is probably significantly below the asking price.

I  have three vacancies up and now recently two downstairs. 

Cruz is a total dork, but a 3-4 week vacancy between Thanksgiving and Christmas is very normal.

Since the assumable financing and seller carry combined could put a strain on your monthly expenses, it’s important to model different scenarios for vacancy, maintenance, and management costs.

I see a lot of LL compare their old unit that hasn't been remodeled in 15 years and has delayed maintenance to some newer units.... they create a vacancy but jumping to what they see as market and that vacancy and remodel costs them tons of $$ that takes YEARS to catch up on with that jump to market.

Before taking out profits, make sure you have enough set aside for unexpected expenses like repairs, vacancies, or larger maintenance issues.

We've run about a 20% vacancy rate. 2 of our MTRs have been great, the third we sold after it wasn't generating enough inquiries over two years of effort.

I have three vacancies in a C class neighborhood and the only people I’ll rent to now are Section 8 with a small tenant portion.