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#196: "My Vacancy Only Went Up 2%... But My Net Cash Flow Went Down 7.78%?!"
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In this episode of the Multifamily Wealth Podcast, I delve into the true mathematical impact that vacancy has on a multifamily property's net free cash flow. Join us as we break down the numbers and discuss how even a small increase in vacancy can have a significant impact on your bottom line.
I dive deep into the numbers and explain how vacancy can significantly affect your investment portfolio. We often overlook the impact of vacancy, but once you understand the math behind it, you'll see just how crucial it is to consider when analyzing your investments.
In this episode we discuss:
- What is the true impact of vacancy on a multifamily property's net free cash flow?
- How does reducing vacancy by 2% affect net operating income (NOI)?
- How does leverage and debt service payments magnify the impact of vacancy on net free cash flow?
- What is the rule of thumb for the potential impact of a 1% increase or decrease in vacancy on net free cash flow?
- Why is it important for multifamily investors to understand the mathematical impact of vacancy?
Are you a new multifamily investor looking to grow your portfolio but don't know where to start? Are you an existing multifamily investor looking to scale your business and master advanced topics such as capital structure, finding off-market deals, and establishing JV partnerships? Click here to learn more about 7-Day Multifamily, a program in which I teach investors the foundational skills they need to start and scale a multifamily portfolio rapidly.
Are you looking to invest in real estate, but don't want to deal with the hassle of finding great deals, signing on debt, and managing tenants? Aligned Real Estate Partners provides investment opportunities to passive investors looking for the returns, stability, and tax benefits multifamily real estate offers, but without the work - join our investor club to be notified of future investment opportunities.
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