Finance category
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Vacancy Loss Calculator
Translate a vacancy rate into actual dollars lost per year. Add concessions and bad debt to see the full loss-to-lease figure that feeds your cap rate and cash flow.
Annual vacancy loss
$2,016
at 8.0% vacancy
Gross potential rent (annual)
$25,200
Total loss to lease + vacancy
$2,772
11.0% of gross potential
Effective gross income
$22,428
$1,869/mo
Loss breakdown
Physical vacancy
$2,016
Concessions
$252
Bad debt / uncollected rent
$504
Underwriters generally floor vacancy at 5–7% even when history is lower, because turn-over and market softening are routine. Plug this loss into your rental cash-flow or cap-rate calculator for a realistic NOI.
How to Use
- Enter the monthly rent per unit and the number of units.
- Enter your underwriting vacancy rate — lenders typically floor this at 5–7% even if history is lower.
- Add concessions (free rent, discounted months) as a percent of gross potential rent.
- Add bad debt / uncollected rent as a percent of gross potential rent.
- Use the resulting dollar vacancy loss inside your cap rate, DSCR, or cash-flow analysis.
Frequently Asked Questions
What vacancy rate should I use for underwriting?
Most stabilized rentals underwrite at 5–8% physical vacancy. Higher-turn, lower-class, or markets with seasonality should use 8–12%. Lender underwriting rarely accepts below 5% regardless of actual history.
What's the difference between physical vacancy and loss to lease?
Physical vacancy is time with no tenant. Loss to lease is rent collected below market (concessions, renewal discounts, below-market leases). Both reduce effective gross income and should be modeled.
Do I apply vacancy to gross potential rent or scheduled rent?
Apply it to gross potential rent — the rent you would have earned at full market rent with 100% occupancy. Scheduled rent already reflects some discounts or below-market leases, which would double-count.
Should seasonality change my vacancy assumption?
Yes. Markets with university, seasonal, or tourism-driven demand often have predictable vacancy spikes. Underwrite to a weighted annual average that reflects the high and low months, not the best month.
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