A vacancy is a rental unit with no tenant, producing no rent. The word also describes the income a property loses because of empty units. Every rental has some vacancy over time, mostly between one tenant leaving and the next moving in. The goal is not zero vacancy, but short, planned vacancy.
Types of vacancy
- Turnover vacancy: the gap between tenants for cleaning, repairs and leasing.
- Market vacancy: units that stay empty longer because demand is soft or the rent is too high.
- Renovation vacancy: units taken offline on purpose for upgrades.
- Economic vacancy: income lost from empty units plus concessions and unpaid rent, even when units are occupied.
Measuring it
Vacancy rate = Vacant units / Total units x 100
Vacancy loss = Rent for each vacant unit x Time vacant
A hypothetical unit that rents for $1,800 sits empty for 45 days. Using a daily rate of $1,800 x 12 / 365, about $59.18, the vacancy loss is about $2,663. Add $900 for cleaning and paint and $150 for listing and showings, and that one turnover costs roughly $3,713.
Budgeting for vacancy
When analyzing a purchase or setting a budget, subtract a vacancy allowance from gross rent before calculating net operating income. A common starting point is 5% to 8% of gross rent for stable residential properties, adjusted for the local market. On a property with $60,000 of gross rent, a 6% allowance sets aside $3,600 a year for empty time.
How to shorten vacancy
- Start early. Ask about renewal 60 to 90 days before the lease ends, and list as soon as notice is given.
- Price to market. Check comparables before listing; an overpriced unit costs more in empty days than a modest discount.
- Turn units fast. Line up cleaners and vendors before move-out and inspect the day the tenant leaves.
- Market well. Bright photos, a clear description and good curb appeal bring more inquiries.
- Respond quickly to every inquiry and make applying easy.
- Keep good tenants. A renewal at a fair rent avoids vacancy altogether.
Why it matters for landlords
Vacancy is one of the largest and most controllable costs in a rental business. Tracking days vacant per turnover shows where the time goes. In TenantLoop, you can list a unit to your own listings page and a standard feed, collect applications online and send the lease for e-signature, so the steps between a notice and a new move-in happen in one place.
Related terms
Where it gets confusing.
What vacancy allowance should I use when analyzing a property?
Use local market data or your own history. Many investors use 5% to 8% as a starting assumption for stable residential properties, then adjust for the market and the property's condition.
Is a unit with a tenant who is not paying vacant?
Physically, no. Economically, it behaves like one because it brings in no rent. That is why underwriting often uses a combined vacancy and credit loss line.
Should I lower the rent to fill a vacancy faster?
Sometimes. Each empty month costs a full month of rent, so a small reduction that fills the unit weeks sooner can come out ahead. Compare the two over a full year before deciding.