Vacancy Rate Calculator Formula

Understand the math behind the vacancy rate calculator. Each variable explained with a worked example.

Use the Vacancy Rate Calculator

Formulas Used

Vacancy Rate

vacancy_rate = (vacant_units / total_units) * 100

Occupancy Rate

occupancy_rate = (occupied_units / total_units) * 100

Monthly Vacancy Loss

monthly_vacancy_loss = vacant_units * avg_monthly_rent

Annual Vacancy Loss

annual_vacancy_loss = vacant_units * avg_monthly_rent * 12

Variables

VariableDescriptionDefault
total_unitsTotal Units10
vacant_unitsVacant Units1
avg_monthly_rentAverage Monthly Rent(USD)1500
occupied_unitsDerived value= total_units - vacant_unitscalculated

How It Works

Vacancy Rate Calculation

Vacancy rate measures the proportion of rental units that are unoccupied at a given time.

Formula

Vacancy Rate = Vacant Units / Total Units x 100

Occupancy Rate = 1 - Vacancy Rate

Impact

  • Each vacant unit represents lost income
  • Vacancy directly reduces effective gross income and NOI
  • Target vacancy varies by market: 3-5% is tight, 8-10% is average, above 15% is concerning

    • Worked Example

    A 10-unit building has 1 vacant unit with average rent of $1,500/month.

    total_units = 10vacant_units = 1avg_monthly_rent = 1500
    1. 01Vacancy rate: 1 / 10 x 100 = 10.0%
    2. 02Occupancy rate: 90.0%
    3. 03Monthly vacancy loss: 1 x $1,500 = $1,500
    4. 04Annual vacancy loss: $1,500 x 12 = $18,000

    Frequently Asked Questions

    What is a normal vacancy rate?

    National residential vacancy averages around 6-7%. Tight urban markets may see 2-4%, while some rural or oversupplied markets reach 10-15%. Your local rate depends on supply, demand, and economic conditions.

    How can I reduce vacancy?

    Price competitively, maintain the property well, respond quickly to maintenance requests, screen tenants thoroughly to reduce turnover, and begin marketing before current tenants leave.

    Should I use physical or economic vacancy?

    Physical vacancy counts empty units. Economic vacancy also includes occupied units paying below market rent or not paying at all. Economic vacancy gives a more complete picture of income loss.

    Ready to run the numbers?

    Open Vacancy Rate Calculator