Vacancy Rates Hit 7.6%: Why Distressed Landlords Are Your Best Leads

Somewhere right now, a landlord is staring at a mortgage payment on a property that's been sitting empty for three months. The tenant left in November. The listing's been on Zillow since December. And every week that unit stays vacant, another $400 drains out of their bank account.

That landlord doesn't want your sympathy. They want an exit.

And if you're a real estate investor who knows how to find these people — and make them a fair offer at the right time — you're looking at one of the best buying opportunities in years.

Let's talk about why.

The 7.6% Vacancy Crisis: What the Realtor.com January 2026 Data Reveals

On February 17, Realtor.com dropped its latest rent report, and the numbers are stark. The national rental vacancy rate has climbed to 7.6% — a multi-year high that confirms what a lot of us have been feeling on the ground for months.

To put that in context: Q4 2025 Census Bureau data showed national rental vacancy at 7.2%. The Q2 2025 figure was 7.0%, which was already up 6% year-over-year. So the trend isn't just up — it's accelerating.

And here's the number that matters most for deal hunters: 44 out of the 50 largest metropolitan areas are now classified as renter-friendly markets. That means tenants have the leverage. They're negotiating lower rents, demanding concessions, and in some cases just walking to the brand new apartment complex down the street that's offering two months free.

Who's left holding the bag? Landlords. Especially the small and mid-size operators who bought during the 2021-2023 frenzy when rents were climbing 15-20% annually and it felt like vacancy was impossible.

Those days are over.

Bleeding Cash: Why Rising Vacancies Create Desperate Landlords in 44 Metros

Here's the math that's breaking landlords right now.

Say you own a rental property with a $2,200/month mortgage (principal, interest, taxes, insurance). You bought it in 2022 at a 6.5% rate because the rent comps at the time supported $2,500/month — giving you $300/month positive cash flow. Not amazing, but workable.

Now your tenant moves out. The unit sits vacant for two months while you find a new renter. That's $4,400 in mortgage payments with zero income. But it gets worse — because the new renter you find isn't paying $2,500. They're paying $2,300, because that's what the market will bear now that there's more supply. Your $300/month cash flow just became $100/month, and you're still in the hole from those two vacant months.

And that's the optimistic scenario. In some metros, rents are falling much harder.

Realtor.com's data shows landlords in high-supply areas facing increased competition and declining rents. Property owners — especially those with newer acquisitions at higher interest rates — have been forced into aggressive leasing strategies just to get bodies in units. Free months. Reduced deposits. Waived fees.

But at some point, the math just doesn't work anymore. And that's when motivation kicks in.

This is the moment where deals happen. Not when a landlord is thriving. Not when cash flow is healthy. When the monthly bleed becomes unbearable and the property feels like an anchor dragging them under.

Metro Spotlight: Milwaukee (10.8%), Austin (13.8%), and Other High-Vacancy Hotspots

Not all markets are bleeding equally. If you're strategic about where you prospect, you can dramatically increase your hit rate on motivated sellers.

Here are the metros that should be on every investor's radar right now:

Austin, TX — 13.8% vacancy
Austin went on a building spree over the past four years. Tens of thousands of new multifamily units flooded the market, and now there simply aren't enough renters to fill them all. Rents have been falling for over a year. Landlords who bought single-family rentals or small multifamily in 2022-2023 at peak prices and peak rates are getting crushed.

Milwaukee, WI — 10.8% vacancy
This one's particularly telling. Milwaukee's vacancy rate essentially doubled recently, which signals a rapid shift. When vacancy moves that fast, landlords don't have time to adjust. They budgeted for 5% vacancy and they're staring at 10%+. That kind of sudden cash flow disruption creates urgency you can work with.

Other metros to watch: Any market where new construction deliveries have outpaced population and job growth. Sun Belt cities that attracted massive multifamily development — think Jacksonville, San Antonio, Phoenix, and Raleigh — are seeing similar dynamics play out. Suburban vacancy is sitting at 6.7% nationally, and principal cities are at 7.6%, so even the suburbs aren't immune.

The play here is straightforward: target the markets where the gap between what landlords expected and what they're actually experiencing is the widest. That gap is where motivation lives.

How to Filter for Non-Owner Occupied Properties in High-Vacancy Markets

Knowing that distressed landlords exist is one thing. Finding them is another. Here's how to build a targeted list using DealDriven's property data.

Step 1: Start with geography.
Pick your high-vacancy metro. Don't just go broad — drill into the specific zip codes and neighborhoods where vacancy is hitting hardest. In Austin, that might be the East Riverside corridor where new apartments are everywhere. In Milwaukee, focus on the neighborhoods where older rental stock is losing tenants to newer buildings.

Step 2: Filter for non-owner occupied (NOO) properties.
This is your foundational filter. You want properties where the owner's mailing address doesn't match the property address. This tells you it's likely a rental. In DealDriven, you can apply this filter instantly across an entire market.

Step 3: Layer on property type.
Single-family rentals and 2-4 unit properties are your sweet spot. These are typically owned by smaller landlords — the ones most likely to feel the pain of rising vacancy. Institutional landlords with 500-unit portfolios can absorb losses. The guy with three duplexes can't.

Step 4: Look for ownership duration.
Filter for properties purchased between 2021-2023. These owners bought at or near the top. They likely paid premium prices and locked in higher interest rates. They have the least equity cushion and the highest carrying costs. They're the ones most likely to be underwater — emotionally if not financially.

Step 5: Add absentee owner indicators.
Out-of-state owners are even better. Someone who owns a rental in Milwaukee but lives in California has an extra layer of frustration. They can't easily manage the property, they're paying a property manager, and they feel disconnected from the asset. Distance creates motivation.

Once you've built this list, you should have a highly targeted set of property owners who are statistically likely to be feeling the squeeze.

Stacking Signals: Combining Vacancy Data with Negative Equity for Maximum Motivation

Good investors filter. Great investors stack.

Vacancy pressure alone creates motivation, but when you combine it with other distress signals, you're identifying the property owners who are most likely to pick up the phone and say, "Make me an offer."

Here's how to stack:

Vacancy + Negative Equity
This is the killer combo. A landlord with a vacant property who also owes more than the property is worth has almost no good options. They can't refinance. They can't sell retail without bringing cash to closing. They might be open to a short sale, a subject-to deal, or selling at a discount just to stop the bleeding. Use DealDriven's equity filters to identify properties where the estimated mortgage balance exceeds current market value — or where equity is razor thin.

Vacancy + Tax Delinquency
When a landlord stops paying property taxes, that's a flashing red signal. It means the cash flow problem has gotten so bad they're triaging which bills to pay. These owners are often months away from serious legal consequences and highly motivated to sell.

Vacancy + Pre-Foreclosure
The ultimate distress signal. A landlord who's missed mortgage payments and received a notice of default is on the clock. If you can find non-owner occupied properties in pre-foreclosure in a high-vacancy market, you've found the intersection of maximum motivation and maximum urgency.

Vacancy + Code Violations
Some landlords let maintenance slide when the money gets tight. Code violations pile up. Fines accumulate. Now they've got a property that's not generating income and actively costing them money in penalties. These owners often just want out — at any price that makes the problem go away.

The power of stacking is that each signal alone might indicate mild motivation. But when two or three of these signals overlap on the same property? You're not cold-calling. You're reaching out to someone who's been waiting for your call.

Your 30-Day Action Plan: Turning Distressed Landlord Leads into Profitable Deals

Data without action is just trivia. Here's a concrete 30-day plan to start converting distressed landlord leads into closed deals.

Week 1: Build Your Lists

• Pick 2-3 high-vacancy metros or submarkets
• In DealDriven, filter for non-owner occupied properties with the criteria above
• Build separate lists based on stacked signals (vacancy + negative equity, vacancy + tax delinquency, etc.)
• Aim for 500-1,000 records per list
• Run skip tracing on your top-priority list to get current phone numbers and emails

Week 2: Launch Outreach

• Start cold calling your skip-traced list. Lead with empathy, not aggression. "I noticed you own a property on Elm Street — are you still renting it out, or have you thought about selling?"
• Simultaneously, send your first round of direct mail. Handwritten-style letters outperform postcards for this audience. The message should acknowledge the tough rental market without being condescending.
• If you're driving for dollars in your local market, route through high-vacancy zip codes and look for physical signs of distress: overgrown lawns, boarded windows, full mailboxes

Week 3: Follow Up and Qualify

• Follow up with anyone who didn't respond to your first touch. It typically takes 5-7 touches to convert a motivated seller.
• For anyone who's expressed interest, run detailed comps and estimate repair costs. Know your numbers before you make an offer.
• Qualify motivation level: Why are they selling? How soon do they need to close? What do they owe? The answers to these questions determine your offer strategy.

Week 4: Make Offers and Negotiate

• Submit written offers to your most motivated leads
• For properties with negative equity, explore creative structures: subject-to existing financing, lease options, or short sale negotiations with the lender
• For properties with equity, target a 70-75% ARV (after repair value) minus repairs acquisition price
• Get at least 2-3 offers out this week. Not every deal will close, but you can't close what you don't offer on.

Ongoing: Rinse and Repeat
The landlords who said no this month might say yes in three months when another payment comes due and the unit is still empty. Keep your lists warm. Keep mailing. Keep calling.

Here's the bottom line: a 7.6% national vacancy rate isn't just a statistic. It's a signal. It's telling you exactly who's in pain, where they are, and — if you use the right tools — how to find them before your competition does.

The landlords bleeding cash in Milwaukee, Austin, and 42 other metros aren't going to put up a sign that says "desperate seller." But the data tells the story if you know how to read it. And the investors who act on this data in the next 30-60 days are going to lock up deals that everyone else will wish they'd found.

Stop watching the market. Start working it.