Vacancy time
What is it?
The key figure shows the average time period, in number of days, during which the rental object is empty or is vacant during a specified period. It thus measures the time it takes for the real estate company to fill a vacant space with a new tenant after a previous tenant has moved out and rental restrictions have ended. It is an important metric for assessing the property's revenue and operating efficiency.
A short average number of days indicates that the property is quickly filled with new tenants, thereby minimizing revenue losses due to vacancy. Conversely, a long average number of days can signal problems with finding new tenants or other challenges in property management.
How is it calculated?
Total number of days vacant for rental property / Number of rental properties = days/rental property
Why is it important to follow?
One should follow the key figure for several reasons:
Revenue maximization: By minimizing the average vacancy time, the real estate company can maximize its revenue. The shorter the time rental properties are empty, the faster it can start generating rental income again and the less financial losses occur in unpaid rents.
Cost savings: Longer vacancy periods can mean additional costs, such as covering operating costs without income from tenants. Identifying and reducing these costs is a benefit of following this key figure.
Efficiency assessment: The key figure gives an indication of how efficient the real estate company is in finding and attracting new tenants. It can be used to evaluate marketing strategies and rental pricing.
Investor interest: Potential investors and financiers may be interested in this ratio because it affects the property's profitability and value in the long term.
In summary, this key figure helps the property company to optimize revenues, reduce costs and improve efficiency, resulting in a more profitable and well-managed property portfolio.
Created by Homepal
2/15/2024
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