Vacancy Rate Calculator: Measure Empty Units and Lost Rental Income

Vacancy is the number landlords try to minimize and analysts try to be honest about. It's the gap between what your property could earn at 100% occupancy and what it actually earns — and it affects every income metric that matters.

The CalcHub Vacancy Rate Calculator calculates physical vacancy, economic vacancy, and the annual income impact so you can model realistic returns.

Two Types of Vacancy

Physical vacancy rate — the percentage of units that are literally unoccupied: Physical Vacancy = (Vacant Units ÷ Total Units) × 100 Economic vacancy rate — the percentage of potential income lost, which is often higher because it includes concessions, non-paying tenants, and below-market rents: Economic Vacancy = (Lost Income ÷ Gross Potential Rent) × 100

A building can be 100% physically occupied but still have 8% economic vacancy if some tenants are on concessions or paying under market rates.

Example: 20-Unit Apartment Building

Month	Vacant Units	Gross Potential Rent	Actual Rent Collected
January	2	$24,000	$21,600
February	1	$24,000	$22,800
March	3	$24,000	$20,400
Average	2.0	$24,000	$21,600

• Physical vacancy: 2 ÷ 20 = 10%
• Economic vacancy: ($24,000 − $21,600) ÷ $24,000 = 10%

If you also gave 1 tenant a free month on renewal: economic vacancy would be higher than physical.

What's a "Normal" Vacancy Rate?

Property Type	Healthy Vacancy	Warning Level
Single-family rental	3–8%	Above 10%
Small multifamily (2–4 units)	5–8%	Above 12%
Apartment complex (market rate)	5–8%	Above 10%
Affordable housing	2–5%	Above 8%
Commercial (office)	10–15%	Above 20%
Retail	8–12%	Above 18%

For income projections, underwriting with 5–7% vacancy is conservative and appropriate for most residential properties. Using 0% vacancy means one bad month completely destroys your model.

Impact on Annual Income

Vacancy Rate	Effect on $30,000 Gross Annual Rent
0%	$30,000
3%	$29,100
5%	$28,500
8%	$27,600
10%	$27,000
15%	$25,500

The difference between 5% and 10% is $1,500/year — not catastrophic on one unit, but significant on a 20-unit building: that's $30,000/year in additional lost income.

Reducing Vacancy: Practical Approaches

The biggest driver of vacancy isn't market conditions — it's turnover. Every tenant exit creates vacancy, cleaning, repairs, and marketing costs. Smart landlords:

• Price slightly below top of market to attract multiple qualified applicants
• Build relationships: respond quickly to maintenance, renew good tenants early
• Stagger lease expirations so you're not facing multiple vacancies at once
• Track days-to-rent metrics: if you're taking more than 30 days to re-lease, your pricing or marketing needs work

How do I factor vacancy into my cap rate calculation?

Standard practice: use a 5–7% vacancy allowance in your NOI calculation. So if gross potential rent is $36,000/year, your effective gross income is $36,000 × (1 − 0.05) = $34,200. Use that in your NOI, not the full $36,000.

What if the building is currently fully occupied?

Don't underwrite to current occupancy. Buildings are almost never perpetually 100% full — tenants leave, leases end, evictions happen. Model 5% minimum vacancy as a baseline regardless of current conditions.

How does vacancy affect financing (DSCR loans)?

Lenders typically apply a vacancy haircut (usually 5–10%) to gross scheduled rent when calculating qualifying income for DSCR loans. Even if you have zero vacancy today, the lender will underwrite with an assumed vacancy.

Related Tools

• Cap Rate Calculator — vacancy feeds directly into your NOI
• DSCR Calculator — how lenders view your income after vacancy
• Rental Yield Calculator — yield calculations with realistic occupancy