Vacancy rate refers to the percentage of houses that are vacant in an area. It is a useful figure that evaluates the profitability of investing in a particular property.
Vacancy Rate - a measure used in Real Estate
Higher vacancy rates of an area indicates that there are a considerable number of houses that are vacant in that area and a property in that area is likely to be rented out and generate rental income. The situation is reverse in areas where the vacancy rate is low. Vacancy rates helps in accessing the profitability of investing in any property.
Investing in properties is often considered to be a safe investment option. People buy residential properties even though they have their own house. It’s a good option as not only will the value of a property increase with time, there is scope for regular income by way of rental income by letting out the property.
Demand vs Vacancy Rate
However, it must be understood that the demand for properties on rent differs from one area to another. So obviously people who want to buy a property for investment, would refer to the vacancy rates of different areas and will go for a property in an area where the vacancy rate is considerably low. It should also be noted that properties in areas of low vacancy rate will be dearer than that of in areas with high vacancy rates.
Recommended Read :
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- Secrets of Making Money in Real Estate
- Things to Know Before Starting Real Estate Investment
- Why Should We Invest in Real Estate?
- Future of Real Estate Investment in India
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- What is a Commercial Property?
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- What is Vacancy Rate?
Vacancy rates can be high even if an area where there are lots of nice houses and a stable infrastructure. When investing in real estate this is such an important factor. If your property cannot be used, then your investment won’t make any profit - then what is the use of investing at all? Then it’s just a liability on your portfolio and hard to get rid of.
The real estate industry is maturing. Until 2014, it was unregulated, fragmented and highly inefficient. Though 2016 will bring in regulation, it will remain fragmented and moderately inefficient. We could see it become a well-regulated, consolidated and moderately efficient industry by around 2020. Growth in the Indian economy will definitely see favorable reflection in the real estate sector, as well.
Vacancy Rate, a very new concept for me, i have a great deal of understanding now, to why the rent or cost in some areas are high and in some areas less. One needs to know about all the attributes while investing in real estate, I have got a good insight on one of the real estate aspect.
One of the possibilities what can we do with our extra money is also buying a property like a house for an example. Renting a house brings you some additional amount of money every month. If the house is situated in the area where there is high demand and low vacancy rate, well even better. Very informative article, providing just the information we need.
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