Why Investors Pay More for Vacant Units

Why Investors
Pay More for
Vacant Units

It may seem counterintuitive, but vacant units often increase the value of a multifamily property — especially under California’s rent control laws.

1. Vacancy Creates Flexibility

Under AB 1482, long-term tenants have capped rent increases. Vacancy removes those limitations entirely. Investors can:

Lease immediately at full market rent
Choose new tenants
Adjust lease terms
Upgrade units before occupancy

2. Vacancy Accelerates Income Growth

Below-market rents significantly suppress property value. Market-rate leasing quickly improves the pro forma income investors use to calculate value.

3. Buyers Prefer Functional, Durable Improvements

Vacant units allow cost-effective improvements that boost rent potential without requiring full renovations. Investors prefer:

Durable vinyl plank flooring
Neutral finishes
Updated fixtures
Clean, functional kitchens and baths
Strong habitability and safety features

4. Vacancy Isn’t Risk — It’s Opportunity

Experienced investors see vacancy as the ability to implement their value-add plan immediately. Strategic vacancy can increase your property’s value by 5–15%.

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Kurt Parkinson

Senior Vice President, Commercial Development

916.798.4214
kurt.parkinson@goparkinson.com
goparkinson.com
CalRE#: 01517516

Coldwell Banker Commercial Kurt Parkinson Norther CA

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