The Terry Hale Show Episode 16

Market Occupancy

TRANSCRIPTION

Hey! Terry Hale here at a 24-unit apartment,
a recently closed project.
And I just want to take a minute here and give you a quick tip
about market occupancy and what you can expect.
So anytime that you’re going to be doing any rehab
and this may sound simple if you’re a house flipper
and you’ve been doing rehabs.
But the last thing you want to do is over-improve the property.
Just bring it back to the current state that it was
at the last time that it was rented.
Another key thing is to look exactly when is the last time
that it was at market occupancy.
Regardless if it’s a 24-unit apartment like this,
or 100-plus-unit or, you know,
hundreds of units on the Self Storage,
it doesn’t matter, we always want to find out exactly
what current market occupancy is.
What we use as a rule of thumb is 85% across the nation.
So, regardless of where you happen to be in the US,
85% is market occupancy. So you have 100 units,
85 of those should be rented typically
a 10% vacancy factor, right?
If you’re at a super hot market or dealing with a smaller project
like this 24-unit, even though this one will be yielding over
$12,000 a month when it’s all said and done.
And that’s not bad money to make, man.
That’s the cash flow, right? It’s cash flow every single month,
netting 12-G’s-plus, in your pocket every single month.
Not a bad deal. This one was a diamond in the rough
and we got seller financing, seven-year deal,
starting out at 6% interest
and not a bad structure at all,
a lot of money to be made in the project.
And I’m super excited about it. So it’s my client, Claudia.
But here’s a fact, you need to understand that
if you’re going to be working with larger projects,
I typically use anything that is over 40 units,
use that market occupancy factor of
85% if you’re below 40 units,
you should be out there kicking some ass
filling those units marketing,
management, proper collections, tightening it up,
running it as a business and not landlording personally.
We’re not buying property down the street from our house,
we can go water the lawn and change light bulbs.
That’s not what we’re doing folks. We hire the professionals,
we let them do what they do best. We focus on what we do best,
but the market occupancy rule of thumb for this tip is 85%
of the larger and anything below 40 units you can get it to 100%
I know you can,
especially if you do business with me
we’ll be ramping up and getting the thing 100% occupied
and reap the benefits of the cash flow.
All right? Cool!
Well, happy investing out there!
If you liked this tip, go ahead
and click the link in the description.
Or better yet, come and see me at TerryHale.com
and I look forward to engaging back with you here
real soon. All right? Take care.

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