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Vacancy and Credit Loss Calculator
The gap between gross potential rent and effective gross income (EGI) is rarely just physical vacancy. Concessions (free month, reduced rent) and credit loss (skips, bad debt) can drag economic vacancy 200-300 bps higher than the physical number. This calculator builds true EGI by separating each leakage so the underwriting model reflects the real revenue base.
Bad debt
Free rent given
Effective gross income
$555,000
Total revenue loss
$45,000
Economic vacancy %
7.50%
Physical vacancy
$30,000
Credit / bad debt
$9,000
Concessions
$6,000
How the math works
Effective gross income (EGI) = gross potential rent minus physical vacancy minus credit loss minus concessions. Economic vacancy is the combined haircut and is what really drives NOI — a 5% physical vacancy plus 1.5% bad debt and 1% concessions gives 7.5% economic vacancy.
Brokers often quote only physical vacancy. Underwrite to economic vacancy or you'll overshoot NOI by 200-300 bps.
How to Use
- Enter gross potential rent (asking rent × units × 12).
- Enter physical vacancy %, credit/bad debt %, and concession %.
- Read EGI, total revenue loss, and economic vacancy percentage.
Frequently Asked Questions
Stabilized credit-loss benchmarks?
Class A multifamily 0.5-1.5%; Class B 1.5-3%; Class C 3-6%. Workforce/affordable can run 5-10% in tough markets.
Are concessions netted from EGI or opex?
Concessions are revenue offsets, not expenses. Underwrite them as a top-line haircut just like vacancy.
Why does this matter for cap rate?
Buyers pay a cap rate on NOI. A 200 bps EGI overstatement cascades into a meaningfully overpriced bid — you'd find it during diligence rent-roll review and need to adjust.
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