Real Estate Vacancy Rate Calculator
Physical Vacancy Data
Total distinct rentable units in the property.
Units currently unoccupied.
Economic Vacancy Data (Financial)
Total rent if 100% occupied at market rates.
Actual rent collected (after vacancies/bad debt).
Physical Vacancy Rate:
0.00%
Physical Occupancy Rate:
0.00%
Economic Vacancy Rate:
0.00%
Total Revenue Lost:
$0.00
Analysis: Enter values to see analysis.
Understanding Real Estate Vacancy Rates
The vacancy rate is one of the most critical Key Performance Indicators (KPIs) for real estate investors, landlords, and property managers. It represents the percentage of all available units in a rental property (or portfolio) that are vacant or unoccupied at a particular time. A high vacancy rate indicates poor property performance or a weak rental market, while a low vacancy rate suggests high demand and efficient management.
Physical vs. Economic Vacancy
There are two distinct ways to calculate vacancy, and understanding the difference is vital for financial analysis:
- Physical Vacancy Rate: This strictly measures the number of empty units compared to the total number of units. It is a snapshot of occupancy logistics.
- Economic Vacancy Rate: This measures the financial loss relative to the property's potential. It accounts for "Physical Vacancy" as well as "Credit Loss" (tenants who occupy a unit but do not pay rent) and concessions (free months of rent given to attract tenants).
Investors often prefer the Economic Vacancy Rate because it reflects the actual impact on the bottom line (Net Operating Income).
How to Calculate Vacancy Rates
The formulas used in the calculator above are as follows:
1. Physical Vacancy Formula
(Number of Vacant Units / Total Number of Units) × 100 = Physical Vacancy %
Example: A 10-unit apartment building has 1 empty unit. (1 / 10) × 100 = 10% Vacancy.
2. Economic Vacancy Formula
((Potential Gross Income – Actual Collected Income) / Potential Gross Income) × 100 = Economic Vacancy %
Example: If the building could earn $10,000/month (Potential Gross Income) but only collects $8,500 due to vacancies and non-payment, the economic vacancy is 15%.
What is a "Good" Vacancy Rate?
While this varies by market and property type, here are general benchmarks:
- Multifamily Residential: 4% to 7% is generally considered healthy. This allows for natural turnover without signaling demand issues.
- Single Family Homes: Ideally 0% (long-term tenants), but budget for 5-8% to account for turnover periods.
- Commercial/Office: Rates fluctuate more heavily with economic cycles but often range higher (10%+) depending on the region.
If your vacancy rate is consistently above 8-10% in a healthy market, you may need to re-evaluate your rental pricing, property condition, or marketing strategy.
Impact on Net Operating Income (NOI)
Vacancy is directly subtracted from Gross Potential Income to arrive at Effective Gross Income. Even a small increase in vacancy can significantly reduce your Net Operating Income (NOI) and, consequently, the property's valuation (Cap Rate valuation).