The Real Cost of Vacancy, Part I: Turnover Risk in Multifamily Properties

Overview

In this episode of the Ironclad Underwriting Podcast, Jason Williams and Frank Patalano examine the true financial impact of vacancy beyond simple underwriting assumptions. They unpack how turnover costs, deferred maintenance, resident behavior, and property class dramatically affect cash flow, timelines, and overall asset performance. This first installment sets the foundation for understanding why vacancy is often far more expensive than it appears on a spreadsheet.

Topics Covered

• Why vacancy assumptions often underestimate real financial exposure
• The true components of turnover costs in multifamily assets
• Differences in turnover risk across Class A, B, and C properties
• How deferred maintenance compounds vacancy duration and expense
• The operational timeline from move out to re lease
• The impact of staffing limitations on vacancy length
• Pest infestations, pet damage, and extreme unit conditions
• When turnover costs shift from operating expenses to capital expenditures
• Why units you cannot access during due diligence often carry the highest risk

Quotes

• “Vacancy is not just lost rent. It is time, labor, capital, and momentum quietly draining from the asset.”
• “The units you cannot get into are usually the ones with the biggest problems, and the biggest costs.”

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