Economic vacancy measures lost rental revenue, not simply empty apartments. Physical vacancy is the percentage of units unoccupied. Economic vacancy is the gap between gross potential rent and revenue actually collected after vacancy, concessions, bad debt, employee units, and loss-to-lease.
A building can be 95% physically occupied and still have weak economics if concessions are large, delinquency is rising, or leases sit below market.
Calculate economic vacancy from the unit-level rent roll. Subtract vacancy, concessions, nonrevenue units, bad debt, and loss-to-lease from gross potential rent, then reconcile the result to deposits.
Underwrite recent monthly trends as well as the T12. Compare collections with competitors, lease expirations, and the local supply pipeline. Treat rapid improvement as upside until operating evidence supports it.
Draymoor Ventures looks for durable real estate where current operations support the basis and growth remains upside. Share an opportunity: Steven@DraymoorVentures.com.