How to factor vacancy risk into your strategy?
A realistic analysis of real estate investments requires consideration of fixed costs and variable rental levels. The INRE trade fair will be an opportunity to discuss realistic calculation models.
When analysing a property investment, many investors focus on the declared rate of return at full occupancy. However, the real profitability of a project should also take into account periods of vacancy, operating costs and the volatility of the rental market.
Vacancy is not just a loss of rental income. It also involves fixed costs – administrative fees, taxes, utilities and debt financing – which are incurred regardless of whether the property generates income. That is why scenario modelling is crucial: assuming a specific occupancy rate (e.g. 85–90%), taking into account management costs and reserves for unforeseen expenses.
During the INRE, we will discuss how to realistically calculate the rate of return, how to analyse the risk of vacancies in different market segments, and how to build a portfolio that is resistant to economic fluctuations. Because an effective investment strategy starts with numbers, not optimistic assumptions.