Hello, this is Shuo.
Today let’s talk about economic vacancy. Although this word is not really a line item in a typical underwriting, you may have heard it from a syndicator’s presentation.
Economic vacancy actually is the combination of all the various rent-loss factors that we’ve mentioned. So, for example, physical vacancy, loss to lease concession, bad debt.
We want to watch this total percentage in comparison to the gross potential rent. And then we can assess the property’s condition, location, and its market situation to see whether it’s in a reasonable range.
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Patrick Grimes is a design engineer and CEO and Founder of Invest on Main Street, LLC. His real estate holdings include general partner ownership of a multifamily and single-family real estate portfolio valued over $146M, including 1,950+ units across the southeastern United States and Texas.
He has been active in real estate investment since 2007, including purchasing land and distressed assets, renovating them, and stabilizing them for long-term cash flow. To scale his real estate portfolio, Patrick moved from single-family to multifamily investing and founded Invest on Main Street, a private equity firm specializing in multifamily value-add projects in emerging markets.