Bachelors Great Location VS. 1-bedrooms in Average Location?

[gwasser]

QUOTE (investmart @ Jan 23 2010, 11:50 PM) Also, not sure why you are comparing 2 bdr to 1 bdr. when referring to CMHC. the question is 1 bdr VS. bachelors.




Hi Neil,

I wanted to show another example where specific market conditions may result in different vacancies for the same type of property.
So a bachelors vs 1 bedrooms vacancy comparison in Ontario may be different than in BC. And 2 bedroom vs one bedroom vacancies in Calgary may be different than those in Edmonton. Sorry if I did not make this point clear enough - My mind sometimes wanders.

 

[Nir]

QUOTE (ThomasBeyer @ Jan 24 2010, 11:39 AM) Not so straight forward actually !

While an attempt is made to accurately measure vacancies it is a "best guess" effort, as vacancies come in FIVE flavours thus different people use the ones that suit their purpose:

a) empty - and ready to be rented
b) empty - but needs work to be rentable
c) empty right now - but rented for next month
d) occupied - but not paying (yet)
e) occupied and not paying (and will likely not pay, being evicted which takes weeks to months depending on province)

So, in a 24 suiter with one suite each in each category: What is the vacancy used for CAP rate measuring purposes ?

Good points Thomas but not related to my statement. you started a new topic about the issues in estimating vacancies.
My statement assumes you have an estimate for vacancies that you can plug in the formula. I`m sure you understand that CAP is a function of many things. examples: higher vacancy rate reduces CAP, lower purchase price increases CAP, more vandalism (bachelors) increases repair costs hence reduces CAP, etc. etc. A property can have a higher vacancy rate but thanks to lower purchase price still have about the same CAP.

Cheers.

 

[Nir]

QUOTE (gwasser @ Jan 24 2010, 12:14 PM) Hi Neil,

I wanted to show another example where specific market conditions may result in different vacancies for the same type of property.
So a bachelors vs 1 bedrooms vacancy comparison in Ontario may be different than in BC. And 2 bedroom vs one bedroom vacancies in Calgary may be different than those in Edmonton. Sorry if I did not make this point clear enough - My mind sometimes wanders.

Thank you Godfried for the clarification and valuable feedback!

 

[Thomas Beyer]

QUOTE (investmart @ Jan 24 2010, 12:34 PM) Good points Thomas but not related to my statement. you started a new topic about the issues in estimating vacancies.
My statement assumes you have an estimate for vacancies that you can plug in the formula. I`m sure you understand that CAP is a function of many things. examples: higher vacancy rate reduces CAP, lower purchase price increases CAP, more vandalism (bachelors) increases repair costs hence reduces CAP, etc. etc. A property can have a higher vacancy rate but thanks to lower purchase price still have about the same CAP.

Cheers.
I understand that .. CAP rates are somewhat "meaningless" due to the items you mention. Price or price/unit is a HARD fact. Expenses, revenues, CAP rates, vacancies are all "soft" i.e. estimated to a degree, especially when looking forward !