The length of tenancy and the rental vacancy rate can influence considerably how much revenue you derive from your rental property investment in the greater Charlotte area. Whether you own a single-family property that you manage yourself, or you are a rental investor ready to expand your portfolio, it is crucial to take into account these two factors and their development over time to make an informed decision about your next business step. Will you invest in a new rental property? What is the best type of rental you could acquire, and where?
We have come up with a few insights into how you can use the average tenancy and vacancy rate in the Charlotte NC area to boost your rental business. If we have not done it yet, let us detail once more why these rates are so important for you.
Why should you care about average vacancy and tenancy in Charlotte NC?
The number one threat for rental income is a prolonged vacancy. Consider your property rents for $1000 a month, your tenant moves out, and it remains empty for two months. Not only will you spend money on turnover repairs before a new tenant moves in, but you will also lose the rent for as long as the property is empty. Assuming that there are no other large expenses you incur, your rental property would generate $3000-$4000 less than when it is continuously occupied.
Understanding what are the vacancy risks related to the type of property you own or plan to buy, and the area in which it is located is crucial for planning your business development.
What are the vacancy rates in the Charlotte Metropolitan Area?
Vacancy rates fluctuate over time with market conditions. Over the last few years, about 5-6% of rental properties in urban areas and about 6-7% of those situated farther in rural areas were empty at any given time. In 2019, however, there has been a sudden increase of apartments listed for rent in and around Charlotte’s Uptown, and the change is likely to modify the vacancy rates for the period to come.
The vacancy rate is a particularly useful tool for investors that own multi-family rental complexes. Vacancy rates measure the number of vacant units at any given time and they can be used to predict rental income over time. If you just own one or a few single-family units, instead of analyzing vacancy rates, you will benefit more by looking at the average length of tenancy.
What is the average length of tenancy in the Charlotte Metropolitan Area?
The average length of tenancy in single-family units in the greater Charlotte area is anywhere between 2 to 4 years. Just as with the vacancy rate, the length of tenancy is mostly influenced by market conditions, and the type of property, its location, and rent value are such conditions.
If you own a low-rent property that rents for less than $1,000, it is likely that your unit will attract tenants with a higher risk of eviction or property abandonment. Whereas that is not automatically an issue you should be worried about, you may want to factor in larger eviction expenses when you are predicting your rental income over time.
If, on the other hand, you own a property with a large rental value, typically $2000 or more, the property will probably attract professionals that move in town temporarily for business- or work-related purposes. Such tenants usually do not stay long in town, your average tenancy length is considerably reduced, and you deal with more turnovers. Even if planning to live in the long term in town, tenants that are able and willing to pay $2,000 or more are likely qualifying for buying a house as well. Sooner or later, they will move on and buy a property. All in all, expensive rentals have shorter tenancy lengths than the average rental property, larger vacancy periods, and more turnover repairs. These houses bring in more rental revenue but are also more expensive for the landlord.
Use average vacancy and tenancy to decide on rental property investment
When deciding to invest in a new rental property in the Charlotte area, you must strike a balance between how much your rental will generate, versus how much it will cost to maintain it. The ideal type of property has moderate rent value and is situated in a good location for raising a family, which will help attract good quality tenants willing to stay for longer than 3 years. At HomeVault Property Management, we believe that these are the properties that rent for anywhere between $1200 and $1600.
Unsure what to do with your rental property? Contact us at [email protected] and we will be happy to help!