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As a landlord this doesn’t make too much sense. The value of the property is net operating income divided by cap rate, so vacancies would lower value. It doesn’
by cko 7y ago
As a landlord this doesn’t make too much sense. The value of the property is net operating income divided by cap rate, so vacancies would lower value. It doesn’t matter what the gross scheduled rent is in that calculation.
- refurb 7y agoIf you have a tenant paying $1000 per month when market rate is $3000, an empty units drastically increase income and thus the value of the property. It also opens it up to people who want to buy the building and move in.
- travisjungroth 7y agoYou can also look at the value as discounted future cash flow. And in that calculation, an empty apartment that the buyer is confident they can fill quickly and rent for $5k is worth more than a full one renting for $4k. Also, if you take your reasoning to the extreme then an empty apartment building has a negative value.