Los Angeles Vacancy Rate

I often get asked by clients whether my spreadsheets account for vacancy. If the tenants are paying below market rents, I don’t.

Let me back up. The recent census determined that L.A.’s vacancy rate is down to 2.8% from an already astoundingly low 3.7% last year, the fourth-lowest in the nation. Los Angeles has the highest percentage of renters in the U.S. at 52%, according to a Harvard Joint Center for Housing Studies study. What does this mean?

apartment vacancy 2015

It means there aren’t enough apartments. If you own apartments, they will be in demand. It’s that simple.

So why don’t I include 2.7% as a vacancy allowance in my spreadsheets if tenants are paying below market rents due to rent control? The reason is that if one of those tenants leaves, you should jump for joy because you will be able to re-rent that unit in no time and raise the rent while doing it.

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